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South Korea Passes Chile Free Trade Pact


South Korea Passes Chile Free Trade Pact

16 February 2004

SEOUL (Reuters) - South Korea’s parliament braved the wrath of a
farm lobby on Monday to pass a free trade agreement with Chile, the
trading powerhouse’s first bilateral market-opening deal.

The South Korea-Chile free trade agreement (FTA) was signed a year ago,
violent demonstrations by farmers and obstruction by farm-belt
foiled three previous attempts by the National Assembly to vote on the
trade bill.

With nervous lawmakers eyeing an April 15 general election, the Chile
passed the unicameral assembly by a vote of 162 for, 71 against and one
abstention. A total of 234 lawmakers in the 273-seat assembly cast votes.

South Korea’s commerce ministry hailed the vote and said it would
exports to Chile of cars, mobile phones and other key industrial goods
$220 million a year in the medium term.

Manufacturers have given higher figures for South Korea’s export gains
voiced hopes that Chile will serve as a beachhead in the rapidly
integrating North-South American market.

"The liberalization of trade is an inescapable trend, and our government

will make active efforts on FTAs with Singapore, Japan and other
countries,’’ the ministry said in a statement.

Until Monday, South Korea had been one of the few members of the World
Trade Organization not to have signed a FTA. Countries across the globe
have been scrambling to seal one-on-one deals since WTO talks to tear
trade barriers became bogged down.

The Federation of Korean Industries said the tortuous passage of the
FTA "served the lesson that the business world and the government must
great pains to balance competing interests and to build public consensus

for liberalization.’’


The head of a major farm group said he and his followers would make
politicians pay at the polls in April.

"This will kill the farmers, the farms and this country’s agriculture,’’

said Seo Jung-eui, chairman of the Korean Advanced Farmers Federation.

"We will work to make sure that those who voted for the agreement will
their seats in the election,’’ said Seo, one of about 3,000 farmers
estimated had staged a rally outside the parliament complex in Seoul.

Last year, Seoul proposed a 10-year, 119 trillion won ($100 billion)
package to mollify farmers, who make up about 12 percent of South Korea’s

population and flex political muscle far in excess of their tiny
contribution to gross domestic product.

Sensitive products like meat and rice were excluded from the pact with
Chile. But South Korea farmers fear cheap Chilean fruit and believe any
opening of the country’s highly protected agricultural markets will
eventually put them out of business.

South Korea’s exports to Chile, mainly vehicles and appliances, amounted
$456.5 million In the first 11 months of 2003. Chile sold $947.2 million

worth of goods to South Korea in that period, about 40 percent of which

Chile’s Senate approved the FTA unanimously in January.