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FTA Talks With Japan: Positive But Prudent Approach Needed

Korea Times

FTA Talks With Japan: Positive But Prudent Approach Needed

9 February 2006

Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo said on Wednesday that the government would seek to resume free trade agreement (FTA) talks with Japan soon. Han said that recent developments have created a favorable climate for Korea to resume the FTA talks with Japan.

It appears natural for Korea to facilitate the FTA process with Japan, the world’s secondbiggest economy, after the U.S. If the nation’s FTA talks with the world’s two economic superpowers are realized, the Korean economy will face an era of being fully open.

Taking into account that Korea is currently seeking to become a hub in Northeast Asia, based on an export-driven economy amid a rapid flow of globalization, the government’s positive policy toward the full market-opening is an inevitable selection.

In particular, the nation’s FTAs with the U.S. and Japan are expected to bring about positive factors such as Korean companies’ advances into the world’s biggest markets and the brisk introduction of foreign capital and advanced service industries. The nation’s economic solidarity with the two superpowers will also greatly contribute to cementing alliances with them.

However, we should realize that the FTAs with the U.S. and Japan do not fully guarantee the nation’s entry into the advanced economies. It is almost certain that the FTAs with the two countries will bring many favorable opportunities to Korea for another take-off toward the ranks of advanced countries. But, they could also bring crisis to the Korean economy simultaneously.

This is because positive factors, such as bolstering international competitiveness, will emerge gradually on a long-term basis. On the other hand, negative factors, including serious damage to the Korean agricultural and service industries, and the resultant pains of farmers and domestic filmmakers will appear immediately.

Also, countries with smaller, less sophisticated economies, like Korea’s, should be cautious in seeking FTAs with large, advanced trade partners. Korea’s accords with Chile and the ASEAN have few long-term problems except for domestic farmers, but agreements with the U.S. and Japan need to be carefully considered. Accordingly, the government is required to seek FTA negotiations with the two superpowers aggressively, but prudently, to minimize damages and to maximize benefits from the full market opening.