Why farmers may block US-Korea FTA
Asia Times, Apr 21, 2006
Why farmers may block US-Korea FTA
By Jeffrey Robertson
SEOUL - Those outside Korea tend to assume that negotiations for a free-trade agreement (FTA) with the United States are the perfect tool to weaken the South Korean addiction to agricultural protection.
After all, FTA negotiations can set one domestic economic sector against another in a "beggar thy neighbor" frenzy of winners and losers. In South Korea, the manufacturing, heavy-industry, and services sectors, particularly small-to-medium enterprises, for the most part strongly support closer linkages with the world’s largest economy, which could help Korean manufacturers to regain some of the market share lost to China in recent years.
There is a general belief that such benefits will provide enough popular support to push through a US-Korea FTA, regardless of the harm inflicted on the South Korean agricultural sector. In reality, this may not be the case.
The deep roots of support for agriculture
Every year Lee Kyong-sook dutifully follows her parents, elder siblings, aunts and uncles to a small rural village 45 kilometers outside Busan, South Korea’s second-largest city, to pay respects to the family’s ancestors. The annual trip brings together an entire extended family, hosted by the oldest relatives who tend the tiny, 0.6-hectare plot.
"Visiting our home town is not just fun, it’s also part of our duty," said Lee, 23. Such rural links help to hold South Korean society together.
Support for the agricultural sector among the wider population has a long history in South Korea. Immediately after the Korean War (1950-53), support for the sector was based on the sheer number of people that it employed. Until the 1960s, nearly 60% of the total labor force worked in agriculture.
Another key element was the adoption of policies that sought to ensure a loyal and ardently anti-communist rural population. Immediately after the war, rural holdings were redistributed to reduce the grip of absentee landlords. Inevitably, however, this also resulted in inefficient, undersized farms. During the 1970s and 1980s, food security and the continuing threat of North Korea continued to be rallying cries to support what was becoming an increasingly inefficient sector.
In the 1990s, as South Korea entered the World Trade Organization (WTO) and reached various bilateral trade agreements, successive governments ensured that the agricultural sector was untouched by trade liberalization. Even as South Korea marked up its second year as the most connected broadband-Internet society in the Organization for Economic Cooperation and Development (OECD), it continued to argue for "developing country" status at the WTO, giving it special treatment under WTO rules, and allowing limited agricultural protection.
As other countries adapted to new trends in global trade, signing up to FTAs, South Korea remained slow to act, and agonizingly apprehensive to sign up to its first FTA, with Chile in 2003. Negotiations took more than a year, and the final vote to ratify still resulted in 71 out of 271 members of the National Assembly opposing the trade pact.
Most important, as reflected in the Lee family’s annual trip to their rural home town, agriculture is part of the South Korean soul. It is not only those reliant on the rural economy who support the agricultural sector, it is a melange of city dwellers with roots in the South Korean countryside. Professionals in the manufacturing sector, laborers in heavy industry and those reliant on jobs in small-to-medium-sized enterprises - all return to their rural home towns at least once a year.
In fact, South Korea’s largest cities are made up of recent arrivals from the countryside. During the 1960s and 1970s rapid industrialization drew the rural poor to the cities seeking better-paid jobs. In the 1960s, the South Korean capital, Seoul, accounted for little over 10% of the population; by the 1990s, it was at least 25%. If satellite communities in the surrounding Kyeonggi province were included, the Seoul megalopolis accounted for a massive 45% of the South Korean population. Rural migration to the capital has created an urban entourage of support for continued agricultural protection.
Winners and losers
Undoubtedly, there would be winners in agricultural reform - consumers and the wider South Korean economy. But the potential losers present a more graphic and influential case.
The US Department of Agriculture estimates that the average South Korean pays up to 10 times as much for farm products as the average international consumer. Reducing this price disparity would substantially reduce average household expenditures. Further, support for rice farmers would ultimately be reduced as inefficient operations were forced out of the market, relieving an increasingly large tax burden on the average taxpayer.
South Korea is a small country in global terms, and with only 18% of the land available for agricultural production (mostly because of the mountainous terrain), the amount of farmland is considerably smaller. Yet the total number of farmers in South Korea is still greater than in France, Germany and the United Kingdom combined. Most of these receive support in one form or another from the government. South Korea’s net agricultural support is among the highest in the OECD and approximately equivalent to the sector’s total contribution to the economy. As a result, direct government payments to farmers are an enormous burden on taxpayers.
Relieving this burden would permit cash to flow into more productive areas, such as business investment, the stock market or education - strengthening and fueling economic growth.
Furthermore, agriculture reform would enable government to pursue trade liberalization both bilaterally and multilaterally at the WTO without constant haranguing from hypocritical partners who paint South Korea as a protectionist pariah in international trade. Attention would turn away from South Korean agricultural protection, and turn toward the real culprits in international agricultural trade - the United States and the European Union, whose farm subsidies distort world markets.
However, those who would be losers in agricultural reform present an emotional and highly influential plea to South Korean society. Images of aging grandma-and-grandpa farmers, already struggling to survive, selling out and leaving their farm tear at the hearts of most Koreans.
Lee Kyong-sook knows her aging relatives don’t make any money on the farm, which largely survives on government handouts and the contributions of city relatives. "Nobody wants to take over the farm. It’s remote, boring and financially draining, but someone has to, for our family’s sake."
As agricultural imports enter South Korea under FTAs, the least efficient agricultural operators will be forced out of the market. Predominantly, this will be the small family farms tended by aging relatives who stayed behind as the rest of the family migrated to the cities - farms like that of the Lee family.
The Lee farm, like any one of a hundred thousand similar farms, has been worked by the same family for generations (though not always as the owners). Their ancestors are buried in the surrounding hills, looking down on the family farm in the valley below. These farms form a key part of what it means to be South Korean.
Choosing between a strong economy (and cheaper food bills) and protecting the livelihood of aging relatives struggling on their farms, most South Koreans would still choose the latter - so weakening the Korean addiction to agricultural support will not be as easy as FTA proponents imagine.
Jeffrey Robertson is a political-affairs analyst focusing on international relations in Northeast Asia. He currently resides in Seoul.
