Hastening the FTA Process Could Benefit Japan More Than Korea

As the first major economy figure of Korea, Hyun Myung-kwan, the vice-chairman of Federation of Korea Industries (FKI) made a protest against the rush to process Korea and Japan’s Free Trade Agreement (FTA).

At a press conference held on March 31, he said that “although the Korea-Japan FTA is similar to the implementation of a war between the two countries, we haven’t prepared enough to confront Japan,” remarked Hyun, adding, “Despite that the deadline for the negotiation period has been fixed to the end of 2005, we should take our time and concentrate on negotiation to obtain conciliations.”

He diagnosed that “in comparison with Japan’s customs rate for major Korean industrial products, which is nearly at the zero percent level, most Japanese industrial products are being imposed a customs rate of about eight percent. A FTA between the two countries will greatly influence our industry.”

“In most cases, a FTA is carried out when each countries’ economy supplements the other, but both countries’ economies have too many overlapping industries, which are competing with each other. As most of the technologies of manufacture in Korea have been handed down from Japan, we cannot cope with the fundamental technologies of Japan,” remarked Hyun.

According to Hyun, as a result of three consecutive countermeasure meetings held by FKI’s FTA countermeasure teams, except the textile and steel industries, most of the industrial fields such as auto, machinery, and electronics took sides against the Korea-Japan FTA because of potential damage to Korean industries.

Considering each industrial field’s sensitivity and influence by item, and the time it would take to overtake the leading Japanese companies, Hyun predicted that the plan to open the market item by item will take at least six months to draw up.

These suggestions of Hyun seem to speak for the difficult situation of Korean industries in recent times, and the influences of these suggestions on the future of the Korea-Japan FTA have attracted people’s attention.

Due to the initiation of Korea-Japan FTA negotiations, which could benefit trade between the two countries, the Korean economic world, in spite of the clear disadvantages of the FTA, has not prepared any opposition because of strong public opinion. “Market opening is our sole path of survival,” said one observer.

In the case of the auto industry, abolition of the eight percent import customs could exert competitive strength to Japanese cars, which could rapidly expand the market share of Japanese cars.

“A Korea-Japan FTA will increase the amount of imports rather than exports. Unless we set the premise of technology instruction in advance, the FTA will result in Japanese expansion in market share only,” said a spokesperson of the Korea Institute of Industry and Information Technology.

Won-Jae Lee wjlee@donga.com