The Deal Needs Steps to Protect Farmers, Small Firms
A Korea-China free trade agreement will be a definite plus for the country at least statistically. The governing camp must risk in losing votes from angry farmers, fishermen and small-and medium-sized manufacturing companies.
The success of the deal will hinges on ensuring Korea's small-and-medium-sized manufacturing firms do not disappear due to low-cost Chinese imports. Farmers, fishermen, livestock breeders will also be marginalized.
The FTA will widen the polarization of small and big companies. It would be sad if kimchi were to be imported from China. The agreement will not create more jobs here as the neighboring country is competitive in labor-intensive industries.
The agreement will deepen non-economic ties between Seoul and Beijing. If South Korea can somehow work toward controlling North Korea's trade through South Korea, that would be nice. Seoul wants China's help in containing the Communist country.
Without China's support, the Kim Jong-il regime will find it difficult to sustain its moribund economy, and possibly its regime. Seoul also believes China is probably the most influential in restraining the dynastic regime from producing nuclear weapons.
China is the only country which has provided assistance to North Korea despite international sanctions. China is closer to North Korea than the South Korea is, politically and militarily. China and North Korea have been allies since the Korean War in 1950. The accord will hopefully balance China's relations vis-a-vis the two Koreas. China is more positive than Korea regarding the accord.
President Lee Myung-bak and his Chinese counterpart Hu Jintao are to announce the start of the FTA negotiations after their next meeting.
China's economy has been growing at a double-digit rate, while the American and EU markets are stagnant. China is Korea's largest trading partner. Korea-China trade far exceeds Korea's trade with the United States and Japan combined.
Following the FTA, China will further outdistance the United States and Japan in trade with Korea. The FTA will be far more important than any of Korea's accords with any other country or economic bloc. Seoul's action is also designed to prod the United States and Japan either to ratify or sign their FTAs with Korea.
Local electronics and IT makers want this move as a free trade agreement between China and Taiwan will go into effect in June. Talks will last longer than expected as negotiators will encounter impediments.
South Korea must ensure that China improves transparency to protect intellectual property rights.
Korea can exploit more opportunities in China's services market.
In negotiations, Korea must ask China to globalize her quarantine, inspection and intellectual property rights protection. Even without the FTA, counterfeit products are flooding into Korea. Polluted fish and farming products swamp the local market.
In seeking the deal, policymakers need to check why Japan has been reluctant to strike an FTA with China although Tokyo has a competitive edge over China. Japan's governing camp is not in a position to alienate voters, namely farmers, fishermen and small firms.