Experts: Little Chance for Peninsula Economic Bloc

Some economic experts have raised the possibility of a free trade agreement between the two Koreas.

With regard to the government’s agenda of a potential inter-Korean summit, talk of an FTA seems to have much to do with the government statement of an initiative for “a quantitative and qualitative leap forward.”

Prior to that, the Samsung Economic Research Institute recently claimed that an inter-Korean Comprehensive Economic Partnership Agreement (CEPA) should be concluded. A CEPA is an FTA that reduces tariffs within a country as in the case of the China-Hong Kong CEPA. If no-tariff trade between the two Koreas is internationally accepted through a CEPA, the FTAs between Korea and the U.S. or the EU should be more effective, experts said.

Song Tae-jeong, a researcher at the LG Economic Research Institute, said, “An initiative for a peninsula-wide economic bloc is required to maximize the effect of the Korea-U.S. FTA. Economic cooperation between the South and North should serve as an opportunity to find a growth engine for the South Korean economy, not just an aid to North Korea.

However, others point out that not much should be expected from the summit, given North Korea’s nuclear dismantlement and conflict of interests among powers surrounding the Korean peninsula.

North Korean studies professor Nam Seong-wook of Korea University said that the summit, scheduled at the end of a presidential tenure would not go beyond simple aid pledges and is unlikely to create lucrative business opportunities, and that economy-related agreements would stop at a superficial level.