Korea’s Exports Depend On Today’s Congress Session

Concerns from both inside and outside of the country as to the settlement of the Korea-Chile FTA consent bill in Congress, which is scheduled for February 16, are being stirred.

If the political world continues fail in passing the bill at this fourth attempt due to the floating vote in the upcoming general election, trade experts are anxious about the possibility that Korea may fall back in the international trade world as a “Loner.”

The chiefs of economic organizations have started to urge Congress to pass the bill. Movements overseas have taken on a bad look. The Chile press has expressed “warning messages” to Korea.

-Will Korea retreat to the spot where it was one year before?

“February 16 is the last chance for Korea to settle the Korea-Chile FTA bill problem,” remarked Jung Jae-hwa, the chief of FTA team in the Korea International Trade Association (KITA), adding, “If it fails to get the ratification and it is postponed to the next assembly session, the FTA problem seems likely to retreat to the state of the last year.”

That is because the possibility of the political world, which faces the upcoming general election in this April, holding another session of congress in advance of the election is very low.

In addition, if the FTA problem is brought over to the 17th brand-new congressmen, the formal procedures which were conducted last year, such as drawing up the ratification consent bill in accordance with the law of congress again, explaining it to the newly organized congress and the Unification, Foreign Affairs & Trade Committee of Congress (UFT) all over again, and laying before the general meeting of the congress again, will have to be repeated.

It goes without saying that if the Korea-Chile FTA is not ratified by congress, the confidence rate of Korea in the overseas market will fall off and additional FTAs between other countries such as Japan and Singapore will face a deadlock.

-Five major economic organizations appeal ratification

As the ratification of Korea-Chile FTA consent bill continues to be delayed, the competitive strength of export products has already been decreased, showing the relevant aftermaths.

In particular, as the Mexican government has decided to grant the opportunity to participate in government-led construction projects only to companies based in FTA member countries, examples of Korean companies being left out of the international market are occurring in succession.

As the anxieties about the crisis build up, the five chiefs of the major economic organizations have issued appealing documents on February 15 that stated, “We understood in July 2003, when the consent bill was first brought up to Congress for discussion, that it could be postponed a little due to the opinion confrontation, but we have become anxious about it approaching closer to a ‘state of crisis’ because the ratification has been postponed for a third time,” urging congress to swiftly settle the matter.

The Chilean daily magazine “El Mercurio” reported on February 14 (local time) that “because the Korean congress has postponed FTA ratification continuously for a third time, the US based credit research company, Moody’s has warned that it could lower the credit level of Korea. That is, the FTA rejection in Korea can be connected with the critical financial crisis.”

“It seems that if the consent bill ratification fails to pass again on February 16, it cannot be submitted to a ballot before the general election which is scheduled to be held in April. We hope that the bill can be ratified in the congress on February 16,” added this newspaper.

-It can also exert bad influence on Rice Negotiations

If the consent bill faces veto or postponement on February 16, it can give evil consequences to the re-negotiation of the opening of the rice market which is expected to arouse pressing concerns from the second half of 2004.

The problem of rice market opening possesses a much bigger potential shock compared with that of the Korea-Chile FTA problem. The time limit of the re-negotiation is already set to expire by the end of this year.

In the Uruguay Round compromise in 1994, Korea received the arrangement of an “extension of rice customs imposition” that put off the entire opening of the internal rice market for the next 10 years. According to this arrangement, Korea should decide as to whether or not it will impose the customs on imported rice and its processed products.

“In contrast to the Korea-Chile FTA problem, the rice problem should go through the negotiations with the powerful countries such as the United States and China. It has been also expected that the protest of the farmers will be increased after the general election. The re-negotiation of the rice market opening will be influenced so much,” remarked Ahn Se-young, a professor at Sogang University.

According to this, the pessimistic view which predicts that the Korea-Chile FTA will be cast away forever if it overlaps with the rice market opening problem is not the minority.