The Korea-U.S. free trade agreement formally takes effect at midnight Thursday, four years and 10 months after the two sides completed negotiations. That makes Korea the only Asian country to forge FTAs with the EU and the U.S., which are the world's two largest economic powers.
But dark clouds are forming over the trade pact even before it goes into effect. Leftwing politicians have banded together to form an alliance that could change the dynamics of the general election, and they have set as their first goal the renegotiation or scrapping of the FTA. And the number of Koreans who support the FTA is only minimally larger than of those who oppose it. If a candidate from the opposition camp wins the presidential election at the end of this year, the Korea-U.S. FTA could be scrapped just a year after it went into effect.
Korea is the world's seventh-largest exporter and almost completely dependent on exports. Eighty percent of manufacturing jobs are either directly or indirectly linked to exports. Over the long term, Korea needs to boost domestic consumption and lower its dependence on exports to make its economy stronger. But at present, there is no choice but to forge as many FTAs as possible and open new markets in order to create more jobs and raise the money needed to provide more welfare programs.
There are more than 300 trade pacts in effect between different countries at present, and FTAs account for 50 percent of global trade. The key countries in the global economy find breakthroughs to their economic growth through FTAs. Since Seoul forged FTAs with the U.S. and EU, Japan and China have taken a more active approach in free trade talks with Korea. Japan went a step further to announce its decision to join the Trans-Pacific Partnership negotiations being led by the U.S. and nine other nations, including Chile, New Zealand and Singapore.
The Korea-U.S. FTA encompasses both opportunities and risks. Major exporters will reap tremendous benefits, but owners of small businesses and farmers will face new challenges. Unless Korea improves inefficient systems in its economy like the complicated distribution network and outdated regulations governing the service industry, opening the country's markets completely will only widen the gap between rich and poor.
But Korea cannot toss away this opportunity simply because people are afraid of risks. The government must roll up its sleeves to strengthen industries that will face a crisis due to the FTA. And politicians must do their best so that the FTA serves as the starting point for greater economic opportunities, rather than putting the pact under the microscope again to decide whether or not to axe it, which could damage the vital trust of the country's trading partners irreparably.