Koreas free trade policy poses no threat to the multilateral trade agenda, the countrys finance minister Kwon Okyu said yesterday, as concerns grow over the proliferation of bilateral trade agreements in Asia.
In an interview with Emerging Markets, Kwon said that Koreas April 2 free trade agreement (FTA) with the US will serve not only as a profound economic boost to the Asian nation but should also pave the way for similar pacts. The main block on the [Doha multileral trade talks] is not the FTA, Kwon said. We need more FTAs.
The ADBs regional integration chief Jong-Wha Lee meanwhile pointed out that the surge in bilateral deals threatens to undermine multilateral free trade. If there are so many overlapping FTAs it can create different rules of origin and complicated distinctions between outsiders that cannot help to promote free trade in this area, Lee said yesterday.
The US deal is crucial for Korea, whose economy as a result will receive a boost equivalent to 6% of GDP over the next decade, Kwon said. A successful conclusion of the deal which has yet to be ratified will give Korea increased leverage when they start negotiating with other major economies such as the European Union and China.
Kwon said there will be no change to the pact prior to ratification. At least for Korea, the ratification could and should be done.
The minister also expects the deal to be approved by the U.S. before the fast track authority of the US president expires on July 1. The US government and even the Democrat-dominated [Congress] are eager to pursue free trade. What we sense is their approval rate [for the deal] is increasing, Kwon said.
Kwon hinted that Korea would be willing to resume a bilateral trade deal with Japan if concerns over key products including agriculture are sufficiently addressed. The main obstacle is the Japanese agricultural sector, Kwon said.
The Japanese government is particularly keen to restart negotiations with Korea, which have been suspended since the two sides failed to agree on lifting tariffs on key products. But Kwon said that a bilateral trade deal between the two countries could form the basis for deeper Asian integration resembling the European model.
Pressure to move towards an agreement with Japan is mounting, especially given Koreas burgeoning trade deficit with its neighbour. The $25 billion [trade] deficit with Japan is too big, Kwon said. Without an FTA trade will Japan will just increase the deficit.
Kwon said that Korea will now turn its attention to concluding other trade deals, principally with the EU and China. We are taking a multilateral approach to free trade after the successful negotiation with the US, he said. Kwon said that although the timetable for a deal with China is not yet set, we can move forward with the FTA once ongoing private sector research is wrapped up.