'Korea will not flinch on FTA talks with US'

Stronger measures in store to stabilize housing prices

By Yoon Ja-young

President Moon Jae-in said that his administration has no reason to hold back in talks with the United States over amendments to the free trade agreement (FTA) between the two countries.

“According to an analysis by the U.S. Department of Commerce, the Korea-U.S. FTA benefited both countries. While global trade decreased 12 percent since signing the deal, trade between Korea and the U.S. increased 12 percent between 2011 and 2016,” President Moon said in a press conference.

The comments follow the two countries’ agreement to start follow-up negotiations over the free trade deal, which was triggered by U.S. President Donald Trump’s demand that it should be revised since it was a “job killer” for the U.S.

Moon pointed out that the U.S. now has a bigger portion of Korea’s import market. He also cited a report by the U.S. International Trade Commission (USITC), according to which the Korea-U.S. FTA decreased the U.S. deficit with Korea by $15.8 billion.

“While Korea is enjoying a surplus in goods trade, we are recording a huge deficit in the services trade, and we are also investing much more in the U.S.,” the President said.

He added that the government will point out such facts and negotiate with the U.S., keeping the national interests at the forefront.

“The negotiations will be a long process, and we also need ratification and approval at the National Assembly. It is not desirable to fuss over the U.S. demand for a renegotiation.”

Additional tax hikes

On tax hikes, President Moon said the government may consider it when there is a public consensus.

However, he said, the tax hike plans announced so far will be enough to fund his welfare policies.

After he took office in May, Moon came up with various welfare measures, which are expected to cost 178 trillion won over the next five years.

The new administration will expand health insurance benefits, hire more bureaucrats and subsidize small-sized companies, who will suffer from a drastic rise in the minimum wage next year.

In addition, it announced this week that it will offer an additional 100,000 won every month to parents with a child up to six years old beginning July 2018. The government also plans to raise monthly basic pensions to senior citizens from around 200,000 won to 250,000 won.

Moon said the government announced the economic and welfare policies after preparing how to mobilize the necessary funds to finance the projects.

“The government has constructed all these welfare and other polices within the scope of funding capabilities,” he said. “Raising taxes is not the only source of funding. Spending less through rationalization of tax expenditures is also important.”

Home price stabilization

The President also said that the administration is not considering raising property taxes yet as a means of stabilizing the housing market.

The government recently announced measures to tackle surging home prices in and around Seoul, which include levying huge capital gains taxes on those who own more than two houses.

“I am confident the latest measures are the strongest-ever steps and they will be enough to stabilize real estate prices. If they show signs of rising again, the government has stronger policies in store.”

He added that the government will focus on housing welfare, enabling the working class, newly-weds and young people to rent or purchase a house at lower prices.

He also said that the administration would not rush to shift to a nuclear-free country..

The President pledged during the election campaign that the country would shift from coal-fired and nuclear plants to clean energy such as renewable resources and LNG. Following his inauguration, the country stopped construction of nuclear power plants.