The Power of Free Trade Agreements

Since the conclusion of the bilateral free trade agreement (FTA) with Singapore last March, Korea’s export to Singapore shot up, raising the trade surplus with the city-state sharply.

The Ministry of Finance and Economy said on March 1 that the export volume to Singapore for the 10 months from March to December 2006 after the agreement was $8.102 billion, a 19.9% increase from $6.757 billion during the 10 months of the pre-FTA period from May 2005 to February 2006.

In contrast, imports from Singapore were $4.943 billion during the same period after the deal, only 4.4% up from $4.734 billion before the FTA. So, Korea’s trade surplus with Singapore increased by as much as 56.2% to $3.159 billion during 10 months after the FTA.

Singapore’s investment in Korea rose 41.1%, from $314 million before the agreement to $443 million after the deal, while Koreans invested 20.5% less after the FTA at $318 million from $401 million.

In addition, the number of tourists surged between the two states.

Last year, a total of 454,700 Koreans visited Singapore, a 24.8% increase from the previous year, and 71,000 Singaporeans traveled to Korea last year, 9.6% more than the 64,800 that did in 2005.

sanjuck@donga.com