By Kim Tae-gyu
The Ministry of Foreign Affairs and Trade (MOFAT) announced the conclusion of the Korea-Peru free trade agreement (FTA) earlier this week with much fanfare and a vast majority of newspapers covered it on their front pages.
MOFAT claimed that the FTA would boost exports of Korean automobiles and home appliances as well as help the country secure rare resources including gold, zinc and tin, abundant in Peru.
In addition, such state-run agencies as the Korea Chamber of Commerce & Industry and the Korea Trade Investment Promotion Agency confirmed the significance of the bilateral deal by painting rosy pictures with their own follow-up reports.
However, there is more than what meets the eye _ a picture of the FTA conclusion ceremony even featured Peruvian President Alan Garcia, watching over the shoulders of the trade ministers signing the deal.
The deal was not what the ministry had promised in terms of its impact on Korea’s national output.
In a news briefing, MOFAT said that the FTA would eventually increase the annual gross domestic product (GDP) of Asia’s fourth-largest economy by 0.1 percent on average.
The ministry revised the figure to 0.01 percent, which is based on a set of comprehensive research that included both direct and indirect effects of the trade agreement.
How much is this? Let’s say that you earn $5,000 a month. An uptick of 0.01 percent in your salary is tantamount to 50 cents. Would you call home to say that you got a raise of half a dollar a month?
Should your boss promise a monthly raise of 50 cents, the chances are that you will grumble that the amount was too tiny to even match inflation. Rather, you might think that the boss is simply pulling your leg.
MOFAT should have clarified the expected low impact of the FTA.
It said that it already announced the expected 0.01 percent in its previous press release midway through last year. Hence, it was not attempting to conceal anything.
Then the question is why the ministry did not announce the figure again as soon as the FTA was sealed, and revealed it only after being questioned by journalists.
Another explanation by MOFAT is that the Korea-Peru FTA is a symbolic one. One that will pave the way for more agreements with other Latin American countries. This is a carbon copy of the rhetoric it used in 2004 when Korea struck a deal with Chile.