Korea-China FTA — Terrible Idea

By Phillip Hartman

It often amazes me how South Korea can have the benefit of learning from the mistakes of more developed countries, yet still follow their dismal path. Case in point would be Japan's reluctance to balance the budget amid an aging population and struggling domestic consumption.

The future of Japan looks grim as they've already doubled down too many times before. Yet South Korea seems adamant about following Japan's lead. They're racking up debt during times of GDP growth and passively watching as the population ages and pro-agricultural policies sap consumers of precious spending power.

But the issue of a free trade agreement with China leaves me almost speechless. Have Koreans learned nothing from watching the manufacturing industry in the West gutted by trade with China? In 1950, manufacturing accounted for 34 percent of all jobs; today it has fallen below 13 percent.

These jobs are often touted as being dirty and difficult, but in reality they were good paying middle-class jobs in the United States. Those jobs have been replaced with low-paying subsistence work at department stores and restaurants.

In brief, it's not necessarily the quantity of jobs; it's the quality. Manufacturing is technological and there's lots of room for increases of productivity. That productivity was translated into higher wages for the unions.

But the investors and owners of those manufacturing companies didn't want to share. They opted to shift production to where labor was cheap and keep the surplus for themselves.

While that model did well to make the rich even richer, in the meantime it culled the middle class and lead to decades of borrowing and over spending, bringing us to the present financial meltdown in the United States.

Yet if South Korea goes ahead with a free trade agreement with China, they will follow this same path to an even greater extent. Much of what is sold in Korea is already made in China; imagine if there was no protection of tariffs at all.

One thing that may save the United States is high oil prices, as the goods produced there must sail across the gigantic Pacific Ocean.

But China is no more than a stone's throw from Korea. Any talk that manufacturers would opt to produce goods in Korea, when they could easily produce them across the Yellow Sea for a fraction of the cost, is total nonsense and borderline propaganda.

Unlike the United States, South Korea doesn't produce a surplus of food to counteract the cost of imports. Manufacturing is the bedrock of the South Korea economy and if it were lost to trade with China, then the country would sink.

Surely the South Korean rich would prosper as their capital is international, but everyone else living here can't just pack up and move to greener pastures. They're stuck here. If South Korea goes down, ordinary Koreans go down with it.

Business friendly research institutes can release all the rosy figures they want about how free trade with China would grow the economy and create jobs, but anyone can look at history and see for themselves what works and what doesn't.

When the West is clinging on for dear life: their economies in tatters; their middle class vanished; with China rising and the United States faltering; how anyone can say free trade with less developed countries creates jobs is a mystery to me.

The writer has worked in Korea for three years at EWAS Uijeongbu and LCI Kid's Club Gangdong. He is now living in Seoul. He can be reached at johannphilipe@hotmail.com. The views expressed in the above article are those of the author and do not reflect the editorial policy of The Korea Times.