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Protective law demanded ahead of Korea-Japan FTA

Korea Times | Seoul | 18 October 2004

Protective Law Demanded Ahead of Korea-Japan FTA

By Park Chung-a
Staff Reporter

The four major business organizations, including the Federation of Korean Industries (FKI) on Monday urged the government to enact a special law ahead of a free trade agreement (FTA) with Japan in order to protect domestic companies from negative effects of the pact.

During the meeting with government officials at Shilla Hotel in Seoul, they called for a special act and a task force to support business restructuring and lower import dependency.

Also, they questioned the benefits of the pact, which will likely be signed by 2005. They claimed that when an FTA is concluded with Japan, there will be serious damage to a wide range of manufacturing industries such as cars, electronics and machinery and some parts of the service industry and an enactment of a special law is required in order to compensate damage to companies and workers.

"Along with the government’s pursuit of an FTA, the structure of economy and industry should be reshuffled so it can fit the open era. Some immunity from unfair imports should also be provided,’’ said Hyun Myung-kwan, the executive deputy chairman of FKI.

The proposal was made by FKI, Korea Chamber of Commerce & Industry, the Korea International Trade Association and the Korea Federation of Small Businesses.

"Japan’s various non-tariff barriers and unfair trade practices could hinder us from entering their market, which could make an FTA less efficient. The tariff-cutting agreement alone will not be much help in improving our exports to Japan,’’ said Park Bu-gyu, an official at KITA.

Kim Do-hun, an official at the Korea Institute for Industrial Economics & Trade, a local think tank, supported Park’s concern, saying that low prices will increase car imports from Japan and hollow out the local automobile industry.

Also, the officials said that local electronic businesses would have to increase parts imports from Japan, which will result in raising their import dependency.

In 2002, South Korea’s trade deficit with Japan amounted to US$14.7 billion. Its exports to Japan were $15.14 billion, but it imported $29.85 billion worth of Japanese goods.

 source: Korea Times