As one of the special lectures to celebrate the 10th anniversary of the Graduate School of International Studies (GSIS), Kim Jong-hoon, the chief negotiator of the free trade agreement between the Republic of Korea and the United States (KORUS FTA), visited Ewha on May 4, 2007 to give students a lecture regarding the FTA. The lecture, titled “The KORUS FTA: A Gigantic Leap Toward Openness and Competition,” took place at the Ewha-Samsung Education & Culture Center. Professor Choi Byung-il, Dean of the Graduate School of International Studies provided the opening remarks for the lecture.
Kim began the lecture by introducing an example that showed the state of the Korean economy in the world from the viewpoint of the country that wishes to conclude an FTA with Korea. Kim referenced a New York Times article that argued that there is nothing to prohibit the ratification of the FTA with South Korea. It said the ratification of the KORUS FTA would be the same as concluding an FTA with 88 members of the World Trade Organization (WTO). Kim underscored that the reason why Korea can be evaluated so highly is because of the “incessant interaction with foreign markets.” He was indirectly pointing out that the reason for concluding the FTA can be reflected in this context.
As part of his primary discourse, Kim stated three external and two internal problems regarding the need for the FTA.
The external problems pinpointed by Kim included deepening global competition, proliferation of FTA trends and Korea’s current lagging status in the US market.
In late 2005, Korea’s GDP was approximately 800 billion won, among which monetary gains by exports accounted for 550 billion won; these figures indicate that the trade dependency ratio of South Korea is about 70 percent. Kim said, “Korea cannot maintain its 11th competitiveness in the world by simply letting the present situation persist amid China and India chasing in a fast speed.”
He also added that “regional arrangement is spreading by leaps and bounds.” As such, deriving mutual consensus in multilateral negotiations at the WTO, which comprises 149 member states, is not easy. Secondly, issues that are being dealt in the organization is so broad that, although theologically there can be a consent among members, tangible and detailed results are not coming out.
Kim further added that Korea’s status in the U.S. market is “remarkably falling behind” compared to surrounding Northeast Asian countries. China consists of 14.6% and Japan of 8.3%, whereas Korea accounts for only 3.6% of the U.S. market. Kim indicated that this situation is fatal to Korea because the U.S. market is “very important.” The U.S. market is important because it is a microcosm of a global market place – a huge and fierce global competition is taking place inside the market. Thus, when Korean companies evaluate the reputation of their product, they cannot but refer to their status in the U.S. market.
The two internal problems suggested by Mr. Kim included decreasing growth potential of South Korea due to low birth rate and aging social tide and the backwardness of the Korean service industry.
After mentioning these external and internal problems of which Korea is currently suffering, Kim said that we need to find ways to overcome these problems. One such way by concluding an FTA with the U.S.
The ambassador assumed an annual economic growth rate of six percent, an employment increase of three hundred forty thousand people, and a trade surplus in the manufacturing sector of about 7.5 billion dollars toward the U.S. and about 213 billion toward the world. What is more, foreign direct investment is predicted to increase from 230 to 320 percent.
Kim also provided a general critique of the KORUS FTA, saying that there was a high level of liberalization of goods – meaning non-agricultural goods – but that in terms of agricultural products, Koreans tend to be sensitive, as demonstrated by measures such as the extended, gradual deduction of tariffs. Overall, negotiations were the process of “give and take,” but it was on the basis of the “balance of interests” between two countries, Kim added.
As for the screen quota system that reduced screening of Korean movies to 73 from the previous 143 days, Kim mentioned that “it is a minimal protective measure” for the film industry. To explain the reduction, he said “Could the Korean wave be born without an open reference to foreign culture that led to the development of our own natural traits?” Kim also added that “upholding our own identity should be done with understanding and access to other cultures.”
The opening of the beef market was also emphasized in the lecture. Kim said that there was an import ban introduced because of the occurrence of the “mad cow disease” in the U.S., but with the US’s demand, the ban would be lifted. However, Kim emphasized that the handling of the beef market will be based on scientific evidences and sanitation. More specifically, Kim said that international standard provided by Office International des Epizooties (OIE) and the similar cases in other countries will be taken into consideration. Taking into consideration all such formal standards, there will be another bilateral negotiation between experts from the two countries on the liberalization of the beef industry.
Kim completed the lecture with a remark that Korea will enter into the U.S. market much earlier and with more favorable condition than other countries by concluding the FTA. The Trade Promotion Authority (TPA) is going to end by June 30, 2007 and it is less likely to be renewed in the near future because the Democratic Party, which currently dominates the U.S. assembly, will be reluctant to give the authority to the Republican executive. Thus, KORUS FTA gave South Korea an advantage to seize the U.S. market before other countries advance into the market with similar favorable conditions. In the end of the lecture, the entire audience gave a round of applause when the curtain was lowered.
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