Free Trade and Movies
Officials Should Look at Culture as Strategic Industry
22 January 2006
The government is hurrying to conclude a free trade agreement with the United States before June 2007 at the latest. It appears natural for Korea to facilitate the FTA process with America, the world’s largest economy and Seoul’s greatest ally. The biggest stumbling block is the screen quota - a protective device for the domestic film industry - or so says Washington. Most economists and diplomats call for amputating a limb to save the body. This assertion, however, requires some calm calculations.
A government think tank says the Korea-U.S. FTA will increase the nation’s gross domestic product by 1.99 percent in the long run. But the U.S. International Trade Commission estimates Korea’s exports to America would rise 21.4 percent with the U.S. shipments to Korea soaring 53.9 percent. Seoul believes the growth of big export firms and direct investments by Americans and other foreigners would more than offset the gap. Equally important is the enhancement of political and military ties, officials claim.
The United States is the world’s largest farm goods exporters and has the most competitive service sectors. Proponents of FTA say this would offer chances for Korea’s primary and tertiary industries to strengthen their competitiveness. Sounds plausible theoretically, but actual examples show that an FTA between countries with wide gap in technology and experiences shrivels the weaker partners’ industry, particularly when it is not ready for open competition. Domestic losers may likely far outweigh winners.
Smaller, less sophisticated economies should be cautious in seeking FTAs with large, advanced partners. Korea’s accords with Chile and the ASEAN have few long-term problems except for domestic farmers, but those with the U.S. and Japan need to be carefully considered. The FTA is neither an absolute good, nor a practical plus if approached naively. Some officials say Korea should beat Japan in reaching an FTA with America, but they had better think about why Tokyo is not in a hurry to sign an FTA with Washington.
Had the nation abolished its mandatory screening system of domestic films in the 1990s as the U.S. demanded, its movie industry would not exist today. Hollywood has dominated 85 percent of the global film industry but is fighting hard to take over the remainder, which include film industries in France, Japan and Korea. The nation’s screen quota system may look like a thorn in its flesh, particularly if other countries follow Seoul’s footsteps. However, once it has fully opened its doors, no country has ever beaten back Hollywood’s onslaught.
A financial official Friday criticized the filmmakers’ obstinacy as “collective selfishness,” comparing the 20,000 film workers to Korea’s 48-million population and its $100 million in movie exports to the nation’s total shipments of $280 billion. He was not just simplistic but a simpleton. Washington’s moves show movies are not just cultural products but a strategic industry