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5 years of free trade with Korea

Korea Herald

5 years of free trade with Korea

By Yoav Cerralbo

30 March 2009

On Wednesday, Korea and Chile will be celebrating the 5th anniversary since they signed the free trade agreement.

It was Korea`s first free trade agreement. It was Chile`s first FTA with an Asian partner.

"It`s like the first love, you never forget it," said Chile`s World Trade Organization Ambassador and Chairman of the WTO General Council Mario Matus.

He explained that Chile`s policy is to sign free trade agreements with every country.

"Our first base is through the WTO, the multilateral system," he said. "It`s going on the right direction but not at the right speed."

To date, Chile has signed 20 FTAs that encompass 60 countries. Those deals cover 90 percent of their trade.

Like Korea, Chile is an export driven economy.

The numbers behind the relationship are impressive. In 2003, the first year of the agreement, two-way trade was $1.5 billion. Five years later, trade ballooned to $7.1 billion.

For numbers to keep growing, Matus said that there need to be periodic reviews to assess where the relationship should go.
"It`s like a marriage; it`s forever so to keep the marriage alive you have to add new elements on a permanent basis," he said.

Matus explained that there are some areas that can be improved upon.

First is the phasing out periods of certain products.

Matus pointed to the ongoing European Union talks. Both sides are currently looking at a 10-year phasing out process for certain products while Chile has a 15-year phasing out process for the same products.

Matus hopes that Chile and Korea can come to an agreement to make Chilean products compete on an even playing field.

Also, there are elements in the KCFTA that include discussion of certain products after the Doha rounds finished with the assumption that the multilateral talks would be competed within three years of signing the Korea-Chile FTA.

"We need to reassess what to do with those products and our view is that we should renegotiate those products right away," said Matus.

As for the Doha talks, Matus believes that they are still alive and kicking.

"What is on the table right now is good and that`s why the vast majority of the members say that we have to finish the round right away to send a signal to the world," he said.

"Trade is not the solution for the crisis, but it is part of the solution and therefore the Doha round is part of that solution."

One major obstacle right now is the final nomination of the key players in the Obama administration that would work on the Doha talks.

So far the signals coming out of Washington are not clear because of labor and environment issues.

Matus explained that the labor issue is difficult to put into play because it falls under the auspices of the International Labour Organization.

"What they are saying on these issues is that they want to include or reinforce or make stronger the issues of labor and environment into the agreements."

Matus also explained that the WTO is closely monitoring the issue of protectionism around the world.

While protectionism is a serious challenge right now, he said that the next big obstacle is the downturn in the world`s growth. This year, the GDP growth of developed nations will decrease 1-3 percent, the first time since the World War II.

"All-in-all, it`s better to have a treaty than not have one," he said.