[Editorial] Korea-China FTA?

Korea and China agreed to conduct a joint study on the prospect of an FTA for one year beginning next year. It is safe to say that negotiations for a Korea-China Free Trade Agreement (FTA) have effectively begun.

Korea has already signed FTAs with Chile, Singapore and the European Free Trade Association (EFTA) and is in FTA talks with the U.S., Canada, Mexico and India. China will become the eighth country Korea has had negotiations with for an FTA.

Korea, which has emerged as the world’s 10th largest economy thanks to an export-driven strategy, should actively pursue FTA talks and open its markets. As many 197 FTAs are already in effect worldwide, and trade among FTA countries accounts for 50 percent of the total global trade. Under these circumstances, what would happen if Japan concludes an FTA with China, and China signs an FTA with the U.S. earlier than Korea?

Opening a market is an opportunity and a threat at the same time. The Korea Institute for International Economic Policy (KIEP) forecasted in 2004 that if Korea strikes an FTA deal with China, Korea’s GDP will grow by 18 trillion won annually, thanks to increased exports of cars and steel. This figure is higher than that expected to accrue from the Korea-US FTA, 14 trillion won.

However, a Korea-China FTA is expected to increase Korea’s imports of Chinese agricultural products by 10 trillion won every year. There is another analysis saying that damage caused by Korea and China FTA on the Korean farming community will be 10 times greater than that caused by a Korea-U.S. FTA. China has aimed at the Korean agricultural market over the last 10 years. They even took Korean cows for farming so that they could meet the Korean people’s taste. Smaller manufacturing businesses will be hit hard by a Korea-China FTA. Korea should carefully prepare for the negotiations.

China asked Korea for FTA talks starting in 2002. The two countries also launched FTA discussions at the research institute level last year after China pressured Korea to participate into FTA study. On the other hand, regarding the Korea-U.S. FTA, Korea feels more desperate than the U.S.

Yet, leftists strenuously oppose the Korea-US FTA and distort the facts, saying, “An FTA between Korea and U.S. undermines economic sovereignty.” This proves that their primary aim is not defending Korean economy but stirring up anti- U.S. sentiment.