Employers Concerned About FTA With Japan
23 April 2004
By Seo Jee-yeon
The Federation of Korean Industries (FKI) on Friday proposed that the government take a cautious approach to the ongoing Korea-Japan free trade agreement (FTA) talks, demanding a delay of in the schedule for cutting tariffs on Japanese imports.
The proposal was made in the first meeting hosted by the FKI’s Commerce Committee at the Seoul Plaza Hotel in Seoul, which was launched on Friday.
The committee, aimed at discussing pending commerce issues, is made up of business leaders from the nation’s key industries, including electronics, automobiles, semiconductors, shipbuilding and information technology.
The top agenda in the first committee meeting was the expected fallout of a Korea-Japan FTA, which is expected to be signed by the end of 2005.
Committee members from electronics and automobile sectors spearheaded to demand the delay in a schedule for zero-tariffs toward Japanese car and electronics imports.
’’Given that Japanese cars and electronics goods have a competitive advantage over the corresponding Korean goods, the Korean government needs to delay tariffs cuts in those two sectors after 2005,’’ they said.
’’A rush to adopt a zero tariffs on Japanese cars and electronics goods could worsen the chronic trade deficit with Japan.’’
Korean automotive machinery and electronics industries, in particular, are expected to be vulnerable under a FTA with Japan as Seoul has been imposing tariffs of about 8 percent on such imports, whereas Japan levies no tariffs on them.
According to data from the Korea Automobile Manufacturers Association, despite a 8 percent tariff difference between Japanese and Korean imports, Korean cars were sold only 2,000 in Japan, while Toyota sold out 3,800 units in Korea.
’’In bid to cope with expected fallout from a Korea-Japan FTA, the government also needs to lower non-tariffs barriers in Japan, like customs and the indication of product origin,’’ the committee members said.
They also urged the government to draw a action plan to cultivate parts and materials industries which can create high profits with low cost to lure the Japanese investment after a FTA with Japan.