logo logo

Seoul to expand help for fishing, agricultural sectors under free trade deals

Yonhap News, Seoul

Seoul to expand help for fishing, agricultural sectors under free trade deals

2 January 2012

SEOUL (Yonhap) — South Korea will expand its support for the fishery and agricultural sectors to ease their losses from a massive influx of outside products under free trade agreements (FTAs), the finance ministry said Monday.

According to the ministry, the government will spend 24.1 trillion won (US$20.8 billion) to provide fiscal support for domestic fishing and agricultural households until 2017, up 2 trillion won from the previous plan unveiled in August.

Under the latest support plan, the government will ease conditions in which they can get compensation for losses caused by products imported under free trade deals.

The financial support will be available when product prices fall to less than 90 percent of standard prices. Compensation will be offered for the discrepancy, finance ministry said.

The previous plan was designed to provide compensation when prices fell to less than 85 percent of standard prices, which are calculated by averaging market prices for three years.

In addition, tax support will be expanded for fishing and farming businesses, including provision of tax-free oil and a tax cut for the purchase of related equipment. All those tax benefits will be worth about 1 trillion won, up from 200 billion won unveiled in the previous plan, according to the ministry.

The government will also expand loans and counseling to companies whose sales or production are affected by the influx of imports under free trade deals, the ministry said.

The move comes as South Korea is preparing to enforce an FTA with the United States early this year. A similar free trade pact with the EU went into effect in July.

The government has unveiled diverse measures to protect industries deemed to be severely affected by cheaper foreign products under free trade deals. Experts say that farmers are among those who will be hardest-hit.

South Korea is now seeking to expand such free trade pacts with many countries in a bid to enlarge what it calls "economic territory" in the world. In particular, it is pushing for FTAs with its neighboring countries such as China and Japan.

The government expects free trade with the U.S., in particular, will come as a boon to the nation’s exports and eventually for its overall economic growth going forward.

"The FTA with the U.S. will serve as a big step for us toward reaching the era of $2 trillion trade by nurturing new export markets, which is crucial to our survival," Finance Minister Bahk Jae-wan told reporters in a briefing.

"It will also lower the overall price levels of daily life and expand the scope of options for consumers, while providing us with a chance to create new growth engines and generate more jobs," he added.

South Korea depends much on exports for its economic growth. Recently, the nation saw its trade volume surpass $1 trillion for the first time in its history.