March 17, 2014 12:05
Korea's exports to the U.S. have surged and its trade surplus has risen by around US$9 billion since the free trade agreement with Washington went into effect on March 15, 2012.
The figures support the view that the FTA has had a positive impact on the Korean economy, contrary to fears voiced at the time that American agricultural imports would decimate Korea's farming industry.
The Ministry of Trade, Industry and Energy said Friday that Korea's exports to the U.S. rose 10.3 percent over the two years since the FTA went into effect, well above the average export growth rate of six percent.
An official at the Korea International Trade Association said, "Korean products accounted for only 2.57 percent of the U.S. market in 2011 but rose to 2.75 percent last year."
Exports of car and other transport machinery parts rose 17 percent annually on average, of chemical products 13.1 percent and of petrochemicals 10.4 percent.
The growth in car shipments, however, was achieved independently of tariff cuts in the U.S., which do not start until 2016, due to improved quality and brand awareness.
Imports of American cars also surged thanks to tariffs falling from eight to four percent. Beneficiaries are not just GM, Ford and Chrysler but cars made in the U.S. plants of Toyota, Honda and Volkswagen.
In 2011, only around 1,600 American-made cars were sold here, a mere 10 percent of imports, but last year the number rose to more than 30,000 and 19 percent.
"Once tariffs are abolished in 2016, foreign carmakers are going to step up marketing even more aggressively," said Yoon Dae-sung at the Korea Automobile Importers and Distributors Association.
◆ Agricultural Imports Drop
While the two sides were negotiating during the tenure of presidents Roh Moo-hyun and Lee Myung-bak, civic groups and farmers warned that U.S. meat and agricultural imports would wreak havoc on the local industries. But in fact imports of American agricultural products fell more than 20 percent over the last two years while exports to the U.S. of Korean farm products rose more than 20 percent.
Imports of U.S. beef, which was among the most contentious issues, also fell around 10 percent. The Korean market share of U.S. beef fell from 10.4 percent in 2011 to 7.2 percent last year, while the share of Korean beef rose from 42.8 percent to 50.2 percent. Imports of American pork and chicken also fell to around half the levels prior to the FTA.
Meanwhile, exports to the U.S. of Korean farm products rose from $440 million in 2011 to $530 million in 2013. Nam Yang-ho at the Korea National College of Agriculture and Fisheries said, "This is evidence that we can succeed if we use FTAs as an opportunity to boost the competitiveness of our agricultural industry."
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