By Cho Jin-seo
South Korea will seek to clinch more free trade agreements (FTAs) with emerging countries, including those from South America and Africa, in a bid to boost trade, the main engine behind the country’s rapid economic growth.
Unveiling its 2011 international economic policies Sunday, the Ministry of Strategy and Finance said that pursuing FTAs with emerging countries will become the government’s most important economic mission.
The government is determined to implement FTAs with the United States and the European Union in the New Year through ratification at the National Assembly. It also intends to wrap up ongoing negotiations with Australia, Turkey and Colombia.
Further deals can be settled with several South American nations, Israel, Mongolia, Panama, Costa Rica and the Dominican Republic, according to the report prepared by the ministry, the Ministry of Knowledge Economy and 15 other economy-related ministries and agencies.
The main reason behind the urgency to increase the number of FTAs is emerging China, they said.
“Considering China is also actively expanding free trade deals with countries such as Taiwan and members of ASEAN, we must prepare for the possibility that our companies may lose competitiveness (against China),” the report said. “Also, as the Asian economy grows, we are becoming more important not only as a provider of goods to the global market but also as a consumer of goods.”
Yoon Jeung-hyun, the finance minister, said on Friday that numerous FTAs will bring “fruits to all.”
“Our global FTA network has enabled Korean firms to expand its production network and raise competence levels,” he said during a cabinet meeting. “Since our economy is highly dependent on exports and imports, signing FTAs is necessary for the growth of our economy.”
Only 14.4 percent of Korea’s entire trade comes from nations under FTAs, such as Chile, Singapore, India, ASEAN and EFTA (Iceland, Norway, Switzerland and Liechtenstein). The government wants to eventually increase this portion to 80 percent.
Most recently, Korea signed an FTA with Peru. The deal will take effect in the first half of 2011 at the earliest.
Within Asia, deals to eliminate tariffs are being carefully examined with China and Japan. The government has commissioned research on the effect of a Korea-China FTA, and the results are due by the end of next year. As for Japan, it is up to the willingness of the island nation on whether to resume talks, the report said. A tri-nation FTA among Korea, Japan and China is also under consideration.
The long-delayed deal with the United States has also been settled and it is waiting to be approved by lawmakers of the two. The FTA with the European Union is also pending at the National Assembly, and is planned to go in effect in July next year.
The government assesses that Korea’s exporters and consumers have benefited from its previous FTAs with Chile and Singapore, while damage to domestic industries has been limited. But there are worries that FTAs with more advanced and larger economies such as the EU and the United States may pose a bigger threat to the farming and services industries here.
Meanwhile, the government said it will help energy and natural resources firms by expanding financial support. The Korea Exim Bank, a state corporate loan provider, will increase its loan programs by around 50 percent to firms in the energy, power generation and resources industries, the report said.
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