Korea-U.S. Trade Talks Could Start Soon
JANUARY 21, 2006
by Keuk-In Bae
Trade Minister Kim Hyun-jong said in a news conference Friday, “It remains to be seen whether the upcoming international economic ministers’ meeting scheduled for February 2 will decide to begin Korea-U.S. Free Trade Agreement (FTA) negotiations.” However, he emphasized the importance of reaching an agreement, saying, “An FTA is a piece of invisible, high-speed infrastructure that promotes exports and growth in the 21st Century.”
Current Korean FTA regulations stipulate that an international economic ministers’ meeting shall make decisions on whether to start FTA negotiations after taking public opinion into consideration at a public hearing.
In the meantime, President Roh confirmed his commitment to an FTA in his New Year’s address on Wednesday, saying, “We will pursue FTA negotiations with the U.S. more aggressively.”
The U.S. is also sending strong signals that the negotiations will begin sooner rather than later.
Reuters reported that after signing an FTA with Oman on January 19, U.S. Trade Representative Rob Portman said, “We look forward to announcing the start of FTA negotiations with another country in two weeks.” The news agency indicated that he was referring to Korea.
There is a prevailing perception that the negotiations will be undertaken at an accelerated pace once the two governments announce the beginning of FTA negotiations early next month. This is because the trade promotion authority (TPA) granted to the U.S. administration by the U.S. Congress will expire at the end of March of next year. The U.S. Congress needs three months to complete required procedures after the U.S. administration announces the start of FTA negotiations, leaving negotiators less than one year to finish the talks.
A Korea-U.S. FTA, once concluded, will put some pressure on the domestic agriculture sector, but it is expected to bring gains to the Korean economy overall.
The Korea Institute for International Economic Policy (KIEP) forecasts that a Korea-U.S. FTA would increase the nation’s actual GDP by about 2.0 percent and create 100,000 more jobs in the mid to long term.
The nation’s exports to and from the U.S. are expected to grow 15.1 percent and 39.4 percent, respectively, if an FTA agreement is signed, reducing the nation’s trade surplus by $5.1 billion. But lower commodity prices will bring gains to local consumers as well.
In addition, the FTA is expected to lead to increased foreign investment and lower international funding rates, thanks to its impact on Korea’s improved sovereign credit rating and credibility in the global market.