Ratification of FTA with US

The ratification bill for the Korea-European Union free trade agreement passed the main session of the Korean National Assembly Thursday, and thus the deal will take effect from July 1. With the effectuation of the accord with the EU, which accounts for 30 percent of the global economy, Korea will see its gross domestic project increase approximately 8 trillion won (7.4 billion U.S. dollars) and secure 250,000 additional jobs over the next 10 years, according to think tanks. Prices of European imports will decline to benefit consumers, and this in turn will effectively lower consumer prices. The expansion of free trade with not only the EU but also other economic powers such as the U.S. and India is also essential for Korea, which is seeking to reduce trade dependence on China.

Korean companies should make the most of the new opportunities stemming from the effectuation of the agreement. If they fail to efficiently take advantage of opportunities, they can hardly benefit from the agreement. The treaty includes a “validated exporter system” in which tariffs will be applied to companies certified by the Korea Customs Service as being exemplary in management of origin of products. Benefits will go exclusively to them. As such, companies must urgently prepare countermeasures such as the construction of a computer system for management of origin of products.

Of the eight free trade deals Korea has signed with 45 countries, six involving 43 nations have taken effect. Agreements with the U.S. and Peru have yet to win parliamentary ratification. The Obama administration will begin practical negotiations with Congress, meaning Washington will step up its bid to secure ratification, which has been delayed for nearly four years since the agreement was reached. For Korea and the U.S. to generate win-win effects in economy and national security, they cannot afford to delay ratification any longer. To generate a win-win situation early, the Korean parliament should also expedite ratification.

At Thursday’s parliamentary session to get the free trade deal with the EU ratified, opposition lawmakers focused on their parties’ interests and put top priority on their strategies to win the general elections and presidential election next year. Even after agreeing with the ruling Grand National Party to put the bill to a vote, the main opposition Democratic Party broke its promise in the face of opposition by hard-line lawmakers and the progressive Democratic Labor Party, the partner in its “policy coalition.” As a result, the ratification bill was approved through a vote only involving lawmakers of the ruling party and the Coalition for Future and Hope.

The Democratic Party can be interpreted as more flexible than before in that it did not block the motion to put the bill on the agreement to a vote by resorting to violence. Yet this is not a righteous political path for the party to oppose a trade agreement, which it pursued on its own when it was in power, after a transition of power, and break the compromise between the ruling and opposition parties. Democratic Party chief Sohn Hak-kyu has also taken an ambiguous stance in the face of Democratic Labor Party pressure to “choose between the FTA and coalition with the Democratic Labor Party.” If he is elected president next year through a coalition with the labor party, he might dump the very identity and value of the Republic of Korea to satisfy the demands of the country`s most left-leaning political group. The Democratic Party is urged not to repeat such an act in the upcoming process to win ratification of the Korea-U.S. free trade deal.