Seoul accused of hasty FTA with China

By Lee Hyo-sik

The government was being criticized Tuesday for its hasty conclusion of Korea-China free trade agreement (FTA) negotiations.

The two sides left autos and some agricultural products out of the agreement, which experts say could see it fall short of expectations.

Plus, the accord they initialed was meeting minutes, meaning the signing of a formal agreement is still needed before the pact is sent to the National Assembly for ratification.

Also, the government has not made public the details surrounding the product specific rules of origin (PSR) in the FTA.

The rules determine the country of origin of a product for international trade, which is a very contentious issue for both sides.

In the Korea-U.S. FTA, the PSR rate was set at 35 percent, meaning that when more than 35 percent of parts or ingredients of products are produced in Korea, the U.S. will recognize them as having been made in Korea.

In negotiations with China, Korea had insisted on setting that threshold at 40 percent.

China said it wanted the threshold to be 60 percent, indicating that it does not want to recognize goods produced at the Gaeseong Industrial Complex in North Korea as made in South Korea.

In addition, the government has not unveiled details of the investor state dispute (ISD) and other sensitive issues.

Some speculate that Korea may have yielded too much to China in order to announce the conclusion of the FTA quickly.

“It is unfortunate that the Park administration has taken a unilateral approach when negotiating the trade pact with China,” said You Jong-il, a professor at the Korea Development Institute School of Public Policy and Management.

“The government should have listened to farmers and other concerned groups, and reflected their opinions before reaching the deal. The government should be blamed for its closed-door negotiations tactic.”

You also expressed concern that the public may demand a renegotiation when the details of sensitive matters are revealed.

“We don’t know specifics of the trade pact. If the deal was signed at our disadvantage, this could be a huge problem and many people may demand that the government renegotiate the deal,” You said. “In that case, the opposition parties could boycott it at the Assembly.”

Despite rice being excluded from the deal, farmers staged anti-FTA protests, while the opposition parties claimed that it was a half-baked trade deal.

Some experts say President Park Geun-hye was eager to announce the conclusion of the Korea-China FTA while in Beijing this week. In a post-signing briefing, Ahn Jong-beom, presidential secretary for economic affairs, admitted that the deal was an incomplete one.

The China FTA has been hailed as an epoch-making trade deal for Korea because it is expected to open wider the gates into the world’s second biggest market.

China has been the biggest export market for Korea for some years, and the lack of a bilateral trade pact is cited as a missing link that could bring the two economies closer together.

However, some observers say that closer ties could come at the expense of Korea’s alliance with the United States.