(EDITORIAL from the Korea Times on July 14) - Free Trade With Europe, Let`s Calm Down and Carefully Examine Contents

The Korea-EU free trade agreement announced in Stockholm Monday will undoubtedly
have big, lasting impacts on their economies and industries.
It is the biggest FTA ever concluded by both Brussels and Seoul, the world's
largest and 11th largest traders, respectively. At a glance, Seoul seems to be
the bigger beneficiary, as the European Union is Korea's second-largest trade
partner only after China (Korea is the EU's eighth largest), as well as the
biggest foreign investor here. In addition, the 27-member economic bloc is to
tear down 99 percent of tariff barriers, compared with Korea's 96 percent, within
three years of the accord's implementation.
If the Korea-EU FTA goes into effect during the first half of next year as the
government hopes, it is expected to have the effect of increasing exports by $11
billion and expanding the gross domestic product by 3.08 percent ``in the long
run," said the Korea Institute for International Economic Policy, a government
think tank.
These and other hypothetical benefits may be reasons enough for excitement for
President Lee Myung-bak and his administration, who have set ``becoming the FTA
hub" as one their top policy priorities ??? the only policy the
``anything-but-Roh" administration has inherited from its predecessor. If so,
it's time for Lee and his aides to also think over what brought about the fall of
the Roh Moo-hyun administration; a widened income gap ??? one of the adverse
effects of the FTA, which mainly benefits big businesses and high-tech industries
at the expense of smaller firms and self-employed.
When trade officials say the FTA is a win-win formula, they mean it on a national
level ??? provided it is true at all ??? not on an industrial level. So the first
thing the government should do is to minimize the damages on losers, such as, in
this case, the domestic services industries as well as livestock and dairy
farmers. At stake in this regard is how the government funnels part of the gains
of winning industries, such as automakers and electronics firms, to losers
through careful industrial policies.
President Lee said the government would unveil the contents of the agreement in
due course. This means the ball will soon be in the court of the National
Assembly, causing concerns about another political confrontation over its
ratification, as the entire nation has had to watch over the past two years or so
concerning one with the United States.
Already, there are talks about some ``poisonous" clauses like the ones that
hampered the parliamentary passage of the Korea-U.S. FTA. These include the
``ratchet" clause that bars going back to the pre-FTA days even if serious
damages occur because of the accord, and the notorious ``beef import" provision
??? which calls for unconditionally following the decisions of the World
Organization for Animal Heath (OIE) ??? in which case a similar dispute to the
Korea-U.S. FTA may happen with European exporters.
Lawmakers ought to show bipartisanship and scrutinize the fine print of the deal
instead of engaging in a political dogfight. Unfortunately, optimism seems hard
to find if past experience is any guide.
(END)