U.S.-South Korea trade ties

The United States and South Korea earlier this month announced the start of negotiations for a free trade agreement (FTA). The U.S.-Korea FTA will be one of the world’s largest and most significant, the largest in Korea’s history and the largest in the U.S. since the North American Free Trade Agreement accord with Canada and Mexico was signed in 1993.

Beyond trade and economics, a U.S.-Korea FTA offers enormous political and strategic value to both countries and represents the latest step in an evolving relationship that spans the earliest days of the Cold War to today.

Korea now is the 11th-largest economy in the world and America’s seventh-largest trading partner, and the United States is the largest foreign investor in South Korea. Since 1965, trade between Korea and the U.S. has virtually exploded — from $332 million to more than $70 billion last year. That’s practically a doubling of the trade volume every five years.

By removing tariff and nontariff barriers to trade, requiring tough choices on both sides, the FTA will bring even further significant gains to both countries.

The U.S. International Trade Commission estimated in 2001 that, after four years, U.S. exports to Korea would rise 54 percent and Korea’s exports to the U.S. would increase 21 percent. A similar study by the Korea Institute for International Economic Policy saw U.S. exports to Korea rising $12.2 billion, and Korea’s exports to the U.S. increasing $7.1 billion.

A U.S.-Korea FTA will increase business opportunities for U.S. companies not only in Korea but throughout Asia.

An FTA is projected to increase Korea’s gross domestic product 2 percent, adding 100,000 new jobs. Since the FTA covers a wide range of economic issues, including government procurement, investment, services, competition policy and intellectual property rights, a U.S.-Korea FTA will have positive, long-term, dynamic effects beyond trade expansion and will significantly upgrade the Korean economy’s overall competitive edge.

More importantly, the benefits of the U.S.-Korea FTA would extend beyond trade and economics. The U.S.-Korea alliance, which began more than 50 years ago as a military alliance, has matured over the years. An FTA between the two countries would bring the alignment to a new, truly comprehensive level.

A strengthening of the U.S.-Korea alliance is even more critical for both countries, in view of lingering Cold War remnants in the Korean Peninsula and Northeast Asia’s vulnerability.

A U.S.-Korea FTA will certainly improve the regional climate for cooperation on political and security issues through increased U.S. engagement.

Both governments know very well they have tremendous work ahead of them. It is a daunting task to create the largest FTA since NAFTA in a span of 11 months, before the U.S. administration’s Trade Promotion Authority expires. To successfully conclude this FTA on time, hard work, flexibility and motivation on both sides are crucial.

In demonstration of Korea’s political will and determination at the highest level, President Roh Moo-hyun in his New Year’s address to the nation on Jan. 18, made clear his strong intention to start Korea-U.S. FTA negotiations for the future.

Korea deeply values its long relationship with the United States. The alliance is built on a foundation of shared values — in democracy, freedom and prosperity. Based on these shared principles, the U.S.-Korea political and strategic alliance has grown. It is time to move the alliance to the next level by forging a comprehensive economic partnership through a bilateral free trade agreement.

Lee Tae-sik is ambassador of the Republic of South Korea.

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