With the long-stalled KORUS FTA now finally ratified, South Korea¡¯s gross domestic product(GDP) is estimated to increase by a maximum of 5.66 percent over the next decade, generating up to 350,000 new jobs. The expected increased exports to the United States are predicted to boost the nation¡¯s yearly trade surplus by an average of $2.78 billion over 15 years after the KORUS FTA takes effect next January.
According to the report released by the Korea Development Institute (KDI), the world¡¯s largest-sized bilateral deal is expected to help boost Asia¡¯s fourthlargest economy by helping the nation maintain its 4- percent benchmark growth rate. Thanks to lowered tariffs, the FTA will be lifting both Korea¡¯s exports and imports to and from the global top trader by 3 and 2 percentage points, respectively, and thereby the economic growth rate by about 0.2 percentage points.
Thus, South Korea will be able to achieve a 4- percent growth next year, up 0.2 percentage points from its current official target of 3.8 percent. Market observers are optimistic that the introduction of advanced U.S. services will stimulate domestic players so that they can enhance business practices as well as corporate transparency.
The Korea International Trade Association said in a statement that the final ratification of the bilateral agreement would mark a turnaround in the Korean economy in the future, adding that the FTA will help local firms increase their price competitiveness and preempt the U.S market despite the fact that the global economic downturn is being aggravated and rivalry is getting more serious.
As hopeful news for local citizens, the depreciation of import prices for goods from the USA is projected to slash inflationary pressure, so local households will be able to feel less financial hardship.
As recognized nationwide, however, local farming and livestock industries are again predicted to suffer damage for a considerable time due to the influx of more U.S. products unlike the greatest beneficiary sectors of the automotive and related industry, etc.
According to reliable data, during the next 15 years, the former industries are likely to face losses of approximately $742 million per annum, which reportedly could cause higher unemployment rates in rural areas, while also direct or indirectly affecting other related local industries over the considerable time. With the world¡¯s largest FTA ratified, South Koreans are highly likely to get cheaper legal services, as globally advanced U.S. law firms are likely to tap into the domestic market on a large scale.
From a long-term perspective, the historical FTA, finally approved after a long tug-of-war since its initial stage, could help the comparatively weaker domestic industries compete with the United States.
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