South Korea Economy

Stop games on free trade deals

Pending free trade agreements with South Korea, Colombia and Panama that would boost the economy in Florida and the nation remain stuck in Congress. They are still being held hostage by recalcitrant Republicans who are threatening not to ratify the pacts unless the Obama administration removes retraining services under the Trade Adjustment Assistance program for American workers who might lose their jobs to oversees investment. President Barack Obama is right in standing up to protect workers potentially most harmed by the treaties by holding firm in his support for the retraining program, and a deal he reached last week with a top Republican to extend the program through 2013 should not be blocked by other Senate Republicans.

Taken together, the trio of free trade agreements with South Korea, Colombia and Panama are worth nearly $13 billion in enhanced commerce to U.S. industry and agricultural interests as well as potentially 250,000 jobs. According to U.S. Labor Department figures, the Trade Adjustment Assistance effort has provided retraining support to some 234,949 workers displaced by the North American Free Trade Agreement and other foreign trade arrangements since 2009. At an annual cost of slightly more than $1 billion to administer, it is a relatively modest investment to help Americans who have found themselves out of work through no fault of their own.

Critics cast the renewal of the retraining program, which expired earlier this year, as a waste of money and a bid by the Obama administration to cater to labor unions in the run-up to the 2012 presidential election. But there should be an effort to modernize the work force and better train workers to compete in a global economy.

According to U.S. Labor Department figures, most of these workers who could lose their jobs with the free trade agreements are older and less educated and work in the fields or on an assembly line. Nobody was getting rich from the Trade Adjustment Assistance program. But the TAA has been effective. According to the Labor Department, 59 percent, or about 140,000 people who have accessed TAA services, found work within six months of their retraining.

For too long the free trade deals with South Korea, Colombia and Panama have been delayed by political gamesmanship by both Democrats and Republicans. The free trade agreements have broad support, and the White House's deal last week with Senate Finance Committee chairman Max Baucus should be embraced by other Republicans. The fate of multibillion-dollar economic agreements that will benefit American business should not hinge on dropping modest help for workers who would be most affected.

S. Korea-EU FTA threatens Japan | Autoweet.com

South Korea’s advantage contrasts starkly to Japan’s lack of progress in concluding an economic partnership agreement with the EU. This country only recently concurred to start preliminary negotiations with the EU on the issue. Industrial circles in Japan now have even more reason to press the government to make headway in EPA speaks with the EU.

The EU’s gross domestic product totals about US$16.3 trillion, accounting for a quarter of the world’s total and about 16 times South Korea’s GDP.

South Korea’s vehicle industry is expected to see remarkable benefits. As the EU’s 10 per cent tariff on vehicle imports from South Korea will be abolished, the country’s vehicle exports are expected to grow $1.41 billion a year.

Japanese automakers have been wary of this prospect for some time.

According to the European Automobile Manufacturers’ Association, South Korea’s Hyundai Kia Automotive Group sold 605,400 units in Europe in 2010, surpassing Toyota Motor Corporation’s 567,300.

South Korean vehicles are about 15 per cent cheaper than the equivalent Japanese models , and have been selling well mainly in Eastern Europe, Japanese vehicle industry experts said.

Economists predict that South Korean companies will take advantage of the tariff abolishment to cut prices, expand sales networks and secure talented human resources.

It is inevitable that Japanese companies will be put at a disadvantage compared with their South Korean rivals.

Japanese companies aim to emphasise such advantages of their products as green technologies and high quality. Even so, Naoya Taniguchi, chairman of Toyota’s British unit, said: “The gap in competition now exceeds anything we can overcome by our own efforts.”

South Korean companies’ price advantage will not be limited to cars. They will also have the edge in such products as high-performance digital home electric appliances and batteries.

Unless the Japanese government accelerates the EPA speaks with the EU and signs an agreement, a trade policy source said, “Japanese companies will have only two choices: expand local production or withdraw from the European markets.”

The new FTA may also hurt Japanese firms in the South Korean market. The agreement may enable European corporations to take a lion’s share of the South Korean domestic market in industrial machinery and chemical products, both fields that Japanese companies have long dominated.

Han Unbound, The Political Economy of South Korea

The new Korea, an inside look at South Korea's economic rise

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South Korean economy, success or failure? : an analysis of export-oriented economic policy

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