The free trade talks between South Korea and the U.S. have produced an important agreement. This new agreement will open a new era of opportunity and challenge that will determine the fate of South Korea's economy. Of course, South Korea's service sector and its farmers will be dealt a blow. But from a long-term point of view, the South Korean economy will gain more than it will lose.
This is substantiated by evidence from the past and the experiences of other countries. Experts from these countries are of the opinion that Canada and Mexico have gained much from the North American Free Trade Agreement (NAFTA) that they signed with the U.S. Contrary to what the opponents of the free trade agreement (FTA) may claim, these countries have not become quasi U.S. "colonies".
Did South Korea cave to the demands of the U.S.? Unlike other kinds of negotiations, making concessions in trade doesn't necessarily mean a disadvantage. If a trade agreement can strengthen a country's industrial competitiveness, then making concessions will boost our national interests.
Will the South Korea-U.S. FTA widen the wealth gap? Some people point to trade liberalization or globalization as the cause of the furthering divide between rich and poor, but there is no evidence to support this. In reality, the wealth gap widens with an increase in the number of people who fail to adapt to changes in society brought about by technological innovation and progress. The wealth gap is serious matter, but it should be dealt with separately from trade liberalization.
Weren't the trade negotiations rough-and-ready talks for which we were not fully prepared? Preparation means internal restructuring. But it is one of the sad realities of South Korea that reform doesn't happen until it's motivated by some external shock.
Does the FTA go against our national interests? No, it does not. Over the past 20-odd years, the South Korean economy has grown while opening its markets within the framework of multilateral trade liberalization. If it really lost more than it gained from opening its markets, then how has South Korea's economy been able to grow to the point where per capita income is nearly US$20,000? The world is being integrated into a single economic entity. South Korea's FTA with the U.S. reflects our own self-confidence and our will to play a leading role in a new international economic environment.
Developed and underdeveloped countries have so far been bent on conducting FTA talks, while the WTO's multilateral free trade negotiations have reached a deadlock. The spread of FTAs bringing together various countries is creating a new international trade order. If we have no choice but to participate in this new world order, then how can South Korea turn away from an FTA with the U.S., the world's largest economy?
China wants an FTA with South Korea. It now seems ready to accept whatever demands South Korea will make. Rapid progress is being made in bilateral trade liberalization in a disorderly manner, regardless of the lack of an FTA between the two countries. Now is the time to begin discussing the need for FTA talks with China to minimize the damage from such a disorderly trade pattern. While South Korea needs to resume trade talks with Japan as well, the South Korea-U.S. FTA can serve as a basic framework to establish a new trade order in Northeast Asia.
Over the past years, South Korea and the U.S. have undergone many changes and experienced conflicts in various areas, including the economy and our security alliance. With both sides of the pro-U.S. and anti-U.S. debate heating up, both progressives and conservatives are demanding a new bilateral relationship that befits South Korea's new status.
The South Korea-U.S. FTA will provide a stepping point for taking the South Korea-U.S. relationship to a new level. In addition, the FTA will provide a breakthrough by which the South Korean economy, currently in recession, can find a new way out through restructuring.
I am concerned about those who will quit farming, close down businesses, or lose jobs in the process of implementing the South Korea-U.S. FTA. It is necessary to compensate them for their misfortune and help alleviate their pain. We have the ability and the reserves to do so. And now we should stop this ideologically-driven debate, accept the FTA with the U.S., and join our efforts to adapt to the changes that the new trade system will bring. Political circles should take the initiative in such efforts.
This column was contributed by Park Yung-chul, Visiting Professor at the Graduate School of International Studies of Seoul National University.