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South Korea’s FTA with China to discourage its textile industry
A possible FTA with China would very likely affect the Korean fashion and retail industry severely. Korean industries are already suffering from China’s lower labor costs, which has caused numerous manufacturers to relocate, and growing shares by China in the textile market.
If the tariffs were to be eliminated as well, the local textile industry in Koreawill suffer considerably.
According to data released by the Korea Federation of Textile Industries (KOFOTI), Korea, since 2002, has been witnessing
noticeable losses in its textile trade with China. The trade deficit with China grew steadily from 2002 to
peak at US$ 3.5 billion last year.
Exports to China grew only 13 percent from 2000 to US$3.0 billion, while imports of Chinese textiles spiked 223 percent to $ 6.5 billion. Recently, a government research said, if the FTA between the two nations were to remove all textile tariffs, the exports will rise to less than $ 200 million while imports rise to $ 600 million, making Korea a country that suffers chronic trade deficits worth $ 400 million in the textile sector alone.
Even chemical fibers and other areas where Korea is for the time being likely to take a favorable position against China would be not able to take the lead in the long-term as China swiftly catches up in the fields.
“The FTA with China will deepen our reliance on China in the area of textile trade - currently Korea is getting 52 percent of textile imports from China. Opening up our textile market to China will serve as a serious threat to the domestic textile sector, as it will significantly weaken the competitiveness and basic foundation of Korea’s own textile production system,” said an unidentified industrial expert.
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