Wonhyuk Lim wonders why the Roh Moo-hyon government chose to pursue an FTA with the United States: KORUS FTA: A Pragmatic and Strategic View (Nautilus Policy Forum Online, June 13, 2006).
The decision was a surprising policy change:
Despite the enthusiasm exhibited by the chief negotiators on both sides on February 2, 2006, the official launch of negotiations for a Korea-U.S. Free Trade Agreement (KORUS FTA) came as a surprise to many Koreans. In their view, it represented at best a puzzling move and at worst an abrupt about-face by the Roh Moo-hyun government, raising a number of procedural and substantive issues....
The project isn't consistent with the Roh government's past approach to FTAs,
As for trade policy, the Roh government actively participated in the multilateral Doha Development Round (DDR) negotiations and pursued FTAs in two directions. First, it negotiated essentially “exploratory” FTAs with smaller countries that had a great deal of previous experience with FTAs and posed little threat to Korea’s vulnerable agricultural sector. As a result of these negotiations, Korea signed free trade agreements with Chile, Singapore, and the European Free Trade Association (EFTA). Second, the Roh government also pursued more “strategic” FTAs with a view toward promoting peace and prosperity in Northeast Asia.
Building on the goodwill generated by the Kim-Obuchi declaration of a new partnership in October 1998, a Korea-Japan FTA received top priority. Most experts in Korea believed that this FTA would be mutually beneficial for both sides, with manageable risks for Korea’s manufacturing and Japan’s primary sector. By comparison, many felt that a Korea-China FTA would be detrimental to Korea’s agricultural sector, even though it would give a significant boost to manufacturing exports. A Korea-US FTA was widely regarded as a long-term project, driven mainly by high politics than economics, for it would impose significant adjustment costs not only on Korea’s agriculture but services as well, with less tangible benefits for the manufacturing sector. Most believed that there were economically superior alternatives to a Korea-U.S. FTA with far lower political costs. Against this background, it is only natural that many Koreans are wondering what has changed in the past year to justify the government’s new-found enthusiasm for a Korea-U.S. FTA and “left-wing neoliberalism” (in President Roh’s words)—with Mexico rather than the Netherlands held up as a benchmark.
And why now?
The next series of questions have to do with political economy. Can President Roh, with his low approval ratings, form a winning coalition to secure the passage of something as contentious as the KORUS FTA in the last year of his term? Why didn’t he take up the challenge of liberalization shortly after he took office in February 2003 or after his ruling party secured a majority in the National Assembly in April 2004? Wouldn’t it have made much more sense to liberalize one sector at a time instead of taking on every interest group from movie actors to farmers at once? It is one thing to label the critics of the proposed FTA “anti-American” and hope they will shut up, but quite another to counter their claims with sophisticated arguments based on solid research. Has the government done the preparatory work to address the concerns of various interest groups? Although some academics and politicians argue that it is necessary to use external pressure to overcome the resistance of anti-liberalization forces (or, “chop heads with a borrowed sword”), the government has done preciously little to try to liberalize the protected sectors in the first place. Besides, it is extremely doubtful that the United States would be just content to lend its sword to the Korean government instead of pursuing its own agenda in the trade negotiations. From a political and tactical point of view, what the Roh government has done since 2003 makes little sense....
And why did the government start with important concessions?
Finally, the Roh government’s negotiating tactics—or lack thereof—are troubling, to say the least. The announcement to launch formal negotiations for the KORUS FTA followed Korea’s apparently unilateral concessions in four contentious areas: beef, automobiles, pharmaceuticals, and screen quotas. Although the Roh government insists that is has "voluntarily" liberalized these sectors as part of its general economic policy, this “coincidence” begs the question of why the government gave away precious bargaining chips just a few months before the official launch of the trade negotiations.... Even more puzzling is the Roh government’s apparent preoccupation with concluding the FTA before the expiration of the U.S. Trade Promotion Authority in June 2007, for it further weakens Korea’s bargaining position. Under various guises, fast-track authority regarding trade negotiations has been granted to the U.S. President a number of times since 1974.
Later sections of the paper critique the claims of economic and political benefits from an agreement.
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