Korea Times, 03-24-2006
US FTA Set to Impact Entertainment Industry
By Kim Sung-jin
Korean culture and entertainment industries will suffer considerable damage from a Korea-U.S. free trade agreement (FTA), a local think tank warned Friday.
The Korea Culture & Tourism Policy Institute (KCTPI) called on the government to draw up detailed countermeasures to minimize the negative impact a Korea-U.S. FTA could have on the Korean film, TV production, theater performance and publishing industries.
According to the think tank’s analysis of the estimated impact of the proposed FTA on the Korean culture industry, the bilateral treaty is forecast to do considerable damage to local film production, publishing and broadcasting industries
The institute said it conducted the study at the request of the Ministry of Culture and Tourism (MCT) last November.
The study anticipates that Korea’s culture industry would suffer the greatest damage among all local industries from the proposed FTA, even if Korea continues to limit market access to the domestic market by U.S. films, TV programs and publications.
The think tank said domestic production of film and TV production and publications would drop sharply if Korea lowers both tariff and non-tariff trade barriers on U.S. goods and services across all industries by 50 percent.
The KCTPI projected that only the printing industry would see a faster growth in U.S.-bound exports than U.S. imports after the FTA takes effect, but imports will grow faster than exports in film, broadcasting and publishing industries.
It said Korea’s trade surplus would shrink sharply in all industries except for manufacturing, service and publishing industries but Korea would still be able to increase its trade surplus with the U.S. thanks to a sharp gain in the manufacturing trade surplus.
In a different simulation model, in which Korea was presupposed to have completely removed its trade barriers against U.S. merchandise and services, enforcement of the free trade pact would entail positive effects such as a widened trade surplus, increased exports and a drop in prices, it predicted. Nevertheless, domestic production in Korean broadcasting, film and publishing industries will drop drastically, it said.
Moreover, even if Korea succeeds in not fully liberalizing its culture and service markets while opening its doors wide in other industrial sectors, Korea’s broadcasting and film industries will still see a sharp drop in domestic production, it said.
``The short-term gains expected from either lowered tariff rates or tariff removal entailed by the Korea-U.S. FTA will primarily attributable to increase in domestic manufacturing production. Not all industries will benefit from the free trade pact,’’ the KCTPI said in its report.
``The negative impact of either reducing or abolishing the screen quota system on local film industry is manifest. Korea has opened up a considerable part of its production and distribution markets but the movie theater market is still not as open as that of the U.S.,’’ it pointed out.
The report is expected to fuel debate between the Korean film industry and government following the latter’s announcement earlier this year to halve the screen quota starting July 1.
Meanwhile, U.S. Trade Representative Ambassador Rob Portman’s recent remarks on U.S. agricultural exports to Korea following a Korea-U.S. FTA displeased Korean farmers who are boycotting importation of foreign rice.
Portman was quoted as saying at an agribusiness group meeting in Washington, D.C., Wednesday that the U.S. is already sending $2.2 billion worth of agricultural products to Korea annually despite significant barriers and has a tremendous potential to do more by means of the FTA.