South Korea’s top trade official on Thursday said it would be impossible to scrap a free trade pact with the U.S., stressing that the accord will help South Korea’s economic growth.
The trade pact signed in 2007 is set to go into effect on March 15. South Korea’s parliament approved the free trade pact in November last year despite vehement protests from opposition lawmakers. The deal was approved by the U.S. Congress in October.
The scheduled implementation of the free trade pact will come amid growing calls from South Korea’s opposition parties to renegotiate the trade pact, which they claim unfairly favors the U.S.
The main opposition Democratic United Party has vowed to scrap the pact if it wins in April’s general elections, unless Washington agrees to hold renegotiations to revise some clauses.
Korea’s Trade Minister Park Tae-ho (center) talks with American Chamber of Commerce chairman Pat Gaines (right) and AmCham president Amy Jackson during a meeting in Seoul on Thursday. (Yoav Cerralbo/The Korea Herald)
“It is impossible to drop the pact. The implementation of the accord is just around the corner,” South Korean Trade Minister Bark Tae-ho said in a luncheon meeting with the American Chamber of Commerce in Korea. “If we do so, it will hurt the South Korean economy. People are well aware of positive impacts of the free trade pact.”
Opposition lawmakers say a dispute settlement mechanism involving the Seoul government and foreign investors articulated in the pact undermines South Korea’s legal independence. They have also asked the government map out more protective measures for the agriculture sector.
The free trade accord, known as the KORUS FTA, was supplemented in late 2010 with minor modifications that mostly dealt with the auto industry.
Two-way trade between South Korea and the U.S. reached some $100 billion in 2011, according to the Seoul government.
The KORUS FTA will help the Asian country’s economy expand more than 5 percent in the long term, as it will lead to more exports by reducing trade barriers, a study showed. The deal will also create about 350,000 jobs, helping to ease tightened labor market conditions here, according to the report compiled by 10 local think tanks.
The economic institutes predicted that South Korea will see its trade surplus with the U.S. increase by $140 million annually over the next 15 years after the FTA goes into effect. The nation’s total global trade surplus will expand by an annual average of $2.77 billion, the report showed.
South Korea has been accelerating bids to expand its “economic territory” by signing free trade deals with major economies. A similar deal with the European Union went into effect in July 2011.
Seoul is also seeking to sign free trade deals with neighboring countries such as Japan and China.
In early January, South Korea and China agreed to start formal negotiations for a free trade agreement with the aim of launching talks before the end of June.
China is South Korea’s largest trading partner and bilateral trade between the neighboring countries is expected to reach $300 billion by 2015.