On Nov. 22, the National Assembly in South Korea ratified the Korea-U.S. Free Trade Agreement, which had been delayed about four years, and the deal signed in 2007 is expected to go into effect in January next year.
There are pros and cons of the deal being cited in the nation. Supporters point out that the Korea-U.S. FTA is inevitable and the deal will bring a lot of benefits to the Korean economy with its high dependence on overseas markets. They also said that the KORUS FTA is going to help to solidify the two countries’ long-standing geostrategic alliance, along with strengthening the economic partnership with the United States.
On the other hand, opponents express concern about the potential damage to domestic industries while only a handful of sectors will benefit from the deal.
Experts agree that industries such as automobiles, electronics, textiles and semiconductors in Korea are going to be the main beneficiaries of the FTA, while as other industries such as service, law, pharmaceutical and agricultural sectors are expected to be damaged.
For South Korea, this is the second largest FTA, following the one signed in last July with the European Union, whose Gross Domestic Product tallies $16.4 trillion, accounting for about 30 percent of the global GDP. Given that the United States is the super power whose GDP reaches $14.3trillion, 23% of the global GDP, the impact of the Korea-US FTA on the domestic industries is expected to be significant.
The nation’s economic experts predict that the Korea-U.S. Free Trade Agreement will provide economic benefits to South Korea in the long term, increasing exports by about $1.3billion and creating 350,000 more jobs in South Korea. However, individual industries view the FTA issue with mixed feelings depending on their interests at stake.
Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products will become duty free within five years of the date the FTA enters into force, and most remaining tariffs will be eliminated within 10 years.
For agricultural products, the FTA will immediately eliminate or phase out tariffs and quotas on a broad range of products, with almost two-thirds of Korea’s agriculture imports from the United States becoming duty free upon entry into force.
For services, the FTA will provide significant market access commitments that extend across virtually all major service sectors, including greater and more secure access for international delivery services and the opening up of the Korean market for foreign legal consulting services.
In the area of financial services, the FTA will increase access to the Korean market and ensure greater transparency and fair treatment for U.S. suppliers of financial services. The FTA will address nontariff barriers in a wide range of sectors and includes strong provisions on competition policy, labor and environment, and transparency and regulatory due process.