Leading on free trade
Korea Times, April 10 2005
Leading on Free Trade
By Mike Weisbart
Korea Times Columnist
The Roh administration has not had an easy time handling the foreign policy file. But for all its faults and foibles, there is one very important portion of that file in which the president has provided some strong leadership: free trade.
Koreans have never been keen supporters of free trade. It took them a long time before they got into game by signing a deal with Chile. Indeed, one of the key selling points used to convince people about the need to conclude that deal was the revelation of Korea’s backwardness. Up to that point, only a handful of other countries in the world had not entered into some type of free trade arrangement, and Korea was in that group.
Even the Korean government, which has been the strongest domestic proponent of free trade by far, was unsure of itself. In the negotiations with Chile in the late ’90s, one Korean delegate actually let it slip to the Chilean side that Korea’s strategy was to use a deal with Chile as a dry run before entering negotiations with bigger economic players, implying that his government didn’t really view Chile as much of an economic threat. The Chileans didn’t appreciate the sentiment, of course, and negotiations stalled momentarily.
But eventually a deal was reached and, after a considerable period of foot-dragging and hand-wringing, the National Assembly put the country’s first FTA into effect a year ago this month. For the past few weeks, both sides have been working hard to broadcast the success of the agreement.
The Korean government’s strategy is particularly interesting. The goal is to point out the mutual gains, while emphasizing Korea’s supremacy in high-tech and downplaying Chilean incursions into the Korean agriculture market. In other words, the deal is win-win, but we’re winning more and no farmers are getting hurt.
To get the point across, the ministry of foreign affairs and trade released a nine-point evaluation of the deal’s first year at the end of March. The dichotomy is made clear in the first point: industrial exports to Chile are up 58.6 percent in the past 11 months alone, while ``in contrast, neither the rise of Chilean imports of agricultural goods, nor the negative impacts resulting from it, were greatly significant.’’
The Korean government even managed to enlist the Chilean ambassador to help make its case. The Korean Institute for Economic Policy, a think tank that fills state demand for detailed policy research, held a seminar on April 1 to commemorate the anniversary of the FTA and to sing the praises of free trade in general. In a carefully choreographed speech in which he paused after each sentence while it was translated, the ambassador adopted the government’s line. He lauded the 61.3 percent jump in bilateral trade while agreeably taking pains to downplay the effects of agricultural imports.
(As I listened to him speak, I wondered what his country stands to gain by making the point, given that the FTA is already in effect. Then again, not all the tariffs have been eliminated. The one regulating imports of Chilean wine, for instance, won’t be phased out for another five years. It pays to keep good relations.)
The point of the Korean government’s strategy is clear: the dry run is finished. At the same time the 9-point evaluation appeared, the government also announced its intention to conclude at least 15 other FTAs by the end of 2007. That’s quite a plan and one wonders if the ministry is up to the task. Either way, it is already in preliminary negotiations and undertaking joint feasibility studies with a number of countries like Canada and India, as well as with international groupings like ASEAN and South America’s Mercosur.
Meanwhile, a deal with Singapore was wrapped up last November and, after some tightening of the language, the fight to ratify it in the National Assembly will begin in earnest. The Chile FTA was a leftover from his predecessor, but the responsibility for the Singapore deal and all the other activity emanates directly from this Administration.
Irrespective of how it has handled the other parts of the foreign policy file, the government has provided good leadership on free trade. Anyone who understands the benefits of free trade has to applaud the ambitious approach. The administration knows that skepticism about foreign influence and competition still runs high. Hence the sales job. The trick is to convince enough people that gains can be made at minimal cost.
This is not to say that Koreans are alone when it comes to harboring uncertainty about the benefits of free trade. The point is that they, like others, need to be led to it (you can expect a big fight over the Singapore deal). For national leaders like President Roh, who achieved office on a populist ticket, providing that leadership is a tough job. On some issues, he’s continued to play the populist. On the free trade file, he has not.
