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[Editorial] FTA Measures: “No More Sand Shoveled Against the Sand”

[Editorial] FTA Measures: “No More Sand Shoveled Against the Sand”

Posted April. 05, 2007 08:02,   


The measures for domestic industries, which the government announced after concluding the Korea-U.S. free trade agreement (known as the KORUS FTA), were mostly about giving out cash directly. Those measures had nothing new in them, serving only as “tax delivery measures” that seek to “provide more support” for those industries hit hard by the agreement.

The information technology (IT) industry, which has been the driving force of the Korean economy, has suffered from slowed growth or worsened performance for the last two years. Facing the fundamental challenge of finding a new growth engine, expectations were high for the bilateral trade agreement. Under such circumstances, the government’s measures for those affected should have been encouraging changes in Korea’s economic paradigm and reorganizing its social system.

When announced, however, the measures turned out to be virtually all about offering direct payments to compensate for losses in the agricultural and fishery industries—or “business closedown” subsidies for restructuring.

These are nothing but reiterations of what relevant government agencies have done since long ago. This is why some bitterly denounce the measures as “subsidies for a funeral, not promotion measures for change.”

Prime Minister Han Duck-soo said, “Back in 2004, we came up with a project of investing or lending 119 trillion won in/to the agricultural sector. If our support is not enough, we can consider increasing the amount of the subsidies.” Injecting taxpayers’ money to prevent farmers’ complaints, however, is like “shoveling sand against the tide.” Any method of support that fails to achieve the effect of restructuring or ends up only increasing debts of farming households should not be repeated any longer.

The only thing that can save farming and fishing households is a strategy that enhances the competitive edge of each item and thoroughly strengthens the fundamentals of the agricultural and fishery sectors. In the dairy industry, it would be practically difficult to engage in a price competition with U.S. beef. If Korean beef focuses on high quality, however, it could compete with mass-produced U.S. beef. If it expands in size and works on providing high value-added products, however, the domestic agricultural sector will see signs of hope, too. Sharpening the industry’s competitive edge is what the government measures should concentrate on.

For the KORUS FTA to succeed as much as possible, it is essential to take into consideration those industries and classes affected negatively by the agreement. Nevertheless, the method of support should be guaranteeing the effect of restructuring, not simply allocating cash so that they could stand on their own feet. The KORUS FTA is a basis for Korea to regain its growth potential, promote restructuring, and strengthen its economic fundamentals. New FTA measures putting more emphasis on creativity, competition and effectiveness are desired.