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S. Korean lawmakers sound alarm over FTA with Japan

Asia Pulse | Friday October 22, 2004

S. Korean Lawmakers Sound Alarm Over Fta With Japan

SEOUL, Oct 22 Asia Pulse - A group of lawmakers from South Korea’s ruling party Friday joined the chorus of caution about the possible adverse impact of a free trade agreement (FTA) with Japan on the local market.

"An FTA between South Korea and Japan will likely lower prices of Japanese imports here but increase prices of Korean exports in Japan," Rep. Choi Chul-kook of the ruling Uri Party warned at a meeting of the National Assembly’s Commerce, Industry and Energy Committee.

Citing his research data, Choi said elimination of tariffs would cut prices of Japanese imports by 7.6 percentage points. Japan now imposes an average 2.3 per cent tariff on Korean imports.

"Contrary to the government claim of benefits from an FTA with Japan, it will damage South Korea’s industrial parts and materials sectors," he said, urging the government to reconsider the plan.

Kim Kyo-heung, a lawmaker of the same party, also expressed concern that an FTA would make South Korea subject to Japan in terms of trade unless countermeasures are put in place.

"A survey shows that 66 per cent of business officials and 50 per cent of labor union officials are unaware of how much FTA negotiations have progressed between the two sides," he said.

Ahead of an FTA signing, the two countries should ensure exchange of technology and spread, among other things, Kim said.

Rep. Sun Byung-ryul of the same party urged the government to examine the impact of an FTA with Japan intently, claiming it will likely remove about 20,000 jobs from the car industry and result in more Korean companies relocating to cheaper labor markets such as China.

The machinery industry has been considered as one of the local sectors that would suffer the most, along with the automotive and electronics industries, if the two sides eliminated cross-border tariffs, according to analysts.

Currently, Seoul levies tariffs of about 8 per cent on machinery imports, while Tokyo imposes almost no tariffs on them, according to officials.

In August, South Korea and Japan renewed their commitment to a broad-based FTA at a preparatory meeting, ruling out the possibility of making any more exceptions than necessary to ease concerns about the deal’s adverse effect.

The two sides are trying to work out details for trade, non-tariff measures, investment, procurement and competition, recognition, conflict resolution and cooperation. The next working-level meeting will be held Nov. 1-3 in Japan.

South Korea seeks to sign an FTA with Japan by 2005, hoping it receives less resistance locally than a similar pact inked with Chile that was barely approved by the National Assembly in February after months of delay.

Some South Korean businesspeople have expressed concern that an FTA would set the stage for Japanese imports to hollow out the country’s industrial sector.

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: Asia Pulse