Since February 3, 2006 a total of seven rounds of talks have been completed for the Korea-US Free Trade Agreement (FTA). The seventh round, which concluded on February 16, was ?he most successful round so far, according to Wendy Cutler, the chief negotiator for the U.S.
Korea and the U.S. made progress in negotiating duty-free status for electronically traded products, such as software, music and movies. They also agreed to improve tariffs in sectors such as cosmetics, industrial machinery, pharmaceutical and information technology.
However, the two countries still need to narrow the differences, such as the loosening of Korean auto import rules, access to Korea? rice and beef markets and whether to include the Gaeseong Industrial Complex, an economic zone in North Korea, in the FTA.
An eighth round will be held from March 8 to 12 in Seoul, which is expected to be the last round. To gauge student reaction to these negotiations, the Ewha Voice interviewed six university students about the recently completed seventh round. Most of them agreed that the Korean agricultural sector would be badly hurt. However, many also said that the FTA would be beneficial overall as it would create more income in other sectors.
The students were: Lee Ki-hyun (Korean Literature, 4), Choi Ye-seul-gi (Korean Education, 2), Lim Dae-woon (Seoul National University, 3), Cho Hyung-rae (Dankook University, 4), Lee Byung-han (Hanyang University, 4), Seok Jin-il (Seoul National University, 3).
E.V.: What do you think of the relative status of both countries during the FTA talks, and do you think it changed since the first round?
Lee K: The status can not be the same. The U.S. request to import their beef, re-price pharmaceutical products and reduce mandatory screen quotas before the FTA has even begun shows that the negotiation did not start at the same starting point. They have shown their cards too early.
Choi: Korea and the U.S. may not have the same economic power but they negotiate with an equal status. The U.S. has given up many areas as well as Korea and they value Korea as the world? 11th economic power.
E.V.: Many people protest against the FTA especially because of the loss in the agricultural sector. What is your opinion about opening the agricultural market?
Lee B: Agricultural industry is the primary industry of all nations. If U.S. products penetrate the Korean market after the FTA, who knows whether they are going to charge high prices or even stop the supply? Food sovereignty will be lost and, therefore, I think opening the agricultural market is risking our nation? primary basis of living.
Cho: In the seventh FTA round, the list of protected agricultural products was reduced to 100 items from 235, but I think it should be reduced even more. The Korean agricultural industry is inefficient, and for the economy, achieving efficiency gives cheaper and better products to consumers. Despite subsidies, the Korean market will decline soon. So opening the market will be beneficial as subsidies are saved and cheaper products are supplied.
Lee K: Korean agricultural industry is different from that of the U.S. due to high land costs. But even without the land service cost, U.S. rice would be 1.8 times cheaper than Korean rice, and, including the cost, it is 3.6 times cheaper. Even if we increase the scale of our business, it will be impossible to beat U.S. prices. So, unfortunately, about 70,000 to 100,000 jobs are expected to be lost due to the FTA and, considering the family members of the unemployed, the situation will be even worse.
E.V.: Do you think gains from other industries can outweigh the loss made in the agricultural industry?
Cho: Through an FTA, Korean automobile and semi-conductor companies will gain an enormous market. Because of lowered tariffs, more exports can be made and thus, there will be more income, especially by Korean cars. They are reasonably priced so many will be sold, making profits for the companies. Also, Korea is number one in making semi-conductors, and IT industries in the U.S. will be importing them a lot, which will benefit Korea.
Lee K: I am not sure whether other industries are going to be competitive enough to recover the losses made in the agriculture sector. We are not just competing with the U.S., we have to consider other variables like China. Also, even if we make a profit in these industries, is it right to compensate farmers for the loss of their livelihood with money?
Lim: I think any losses will be relatively minor and temporary, and will be offset by even larger gains to other sectors within the economy. So far, both parties agreed that 99 percent of electronic goods will be non-tariff within 10 years, and Korea will surely benefit from that.
E.V.: In the seventh round, whether to include products made in the Gaeseong Industrial Complex in the FTA was brought up to a greater extent. What is your opinion on this?
Seok: I agree with the U.S., North Korea and South Korea are different countries. They are registered differently in the United Nations and have different nationalities. This FTA is between two countries and, in this case, North Korea should be regarded as another country.
Lim: The U.S. asserts that only products made in South Korean territory are eligible for the FTA, hence benefit from tariff reduction. However, the Gaeseong Industrial Complex is made up of Korean companies and I think its products should be regarded as Korea.
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