South Korea, China sign free trade pact

Ex­perts say pact will bring more harm than good to South Korea

The China Post - - FRONT PAGE -

China and South Korea on Mon­day for­mally signed a free trade agree­ment ( FTA) that would re­move most tar­iffs be­tween Asia’s largest and fourth­largest economies, whose trade is al­ready worth more than US$200 bil­lion.

The pact — largely agreed in Novem­ber and signed by the two na­tions’ trade min­is­ters on Mon­day — aims to grad­u­ally re­move tar­iffs on more than 90 per­cent of traded goods within 20 years.

China is the South’s top trad­ing part­ner as well as the big­gest ex­port mar­ket, and two- way trade stood at around US$235.3 bil­lion in 2014, ac­cord­ing to state data in Seoul.

South Korea is also one of the big­gest for­eign in­vestors in China, pump­ing in some US$1.6 bil­lion in the first quar­ter of this year.

South Korean Pres­i­dent Park Geun-hye, in a let­ter to Chi­nese leader Xi Jin­ping, called the ac­cord a “his­toric mile­stone” that would fur­ther ce­ment re­la­tions.

“The Korea-China FTA will ... take the bi­lat­eral ties that had been built over the years to a whole new level,” Park said in the let­ter de­liv­ered to the vis­it­ing Chi­nese trade min­is­ter Gao Hucheng.

Pending manda­tory par­lia­men­tary ap­proval, the FTA will al­low small and medium-sized South Korean firms greater ac­cess to China’s vast con­sumer mar­ket and help cre­ate more than 50,000 jobs in the South, Seoul’s trade min­istry said.

“In par­tic­u­lar, ex­ports of con­sumer goods in fash­ion, cos­met­ics, home ap­pli­ances and high­end food prod­ucts will in­crease greatly,” it said in a state­ment.

The agree­ment will re­move tar­iffs on 71 per­cent of South Korean ex­ports to China in 10 years and 91 per­cent in 20 years.

Seoul will in re­turn re­move tar­iffs on 79 per­cent of Chi­nese im­ports in 10 years and 92 per­cent in 20 years.

Ne­go­ti­a­tions for the agree­ment, which be­gan in May 2012, have of­ten been marred by an­gry protests by South Korean farm- ers who feared an in­flux of cheap Chi­nese im­ports.

The fi­nal pact ex­cluded many of South Korea’s ma­jor farm­ing and fish­eries goods like rice, beef, pork, pep­per and squid.

By the same to­ken, China ex­cluded or de­layed the open­ing of its rel­a­tively less-de­vel­oped man­u­fac­tur­ing seg­ments such as the auto sec­tor and dis­play panel pro­duc­tion.

Kim Hyu­ung-joo, an an­a­lyst at the LG Eco­nomic Re­search In­sti- tute, said the ar­range­ment may even­tu­ally bring more harm than gain to the South.

“I don’t think South Korea’s well-pro­tected agri­cul­ture sec­tor will be able to im­prove com­pet­i­tive­ness in 10 or 20 years,” Kim said.

“But the sec­tors China man­aged to pro­tect like LCD (liq­uid crys­tal dis­play) pan­els or car­mak­ing will surely im­prove their pro­duc­tiv­ity and com­pet­i­tive­ness,” he added.

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