SEOUL, April 3 (UPI) -- South Korea's free trade deal with the United States is expected to pave the way for the Asian nation to jump on the free trade bandwagon, which could ensure great benefits to its export-driven economy.
South Korea and the United States reached an agreement Monday to tear down bilateral trade barriers, following 10 months of tough negotiations marred by violent protests.
The deal, which requires legislative approvals in both countries, is the biggest free trade accord ever for South Korea. The United States was South Korea's third-largest market in 2006 with two-way trade totaling $74.5 billion. For the United States, the deal is the biggest since the 1993 North American Free Trade Agreement.
Upbeat about the deal, South Korean officials also said they would step up efforts to clinch more free trade deals despite hostility at home from farmers and other workers who fear for their jobs.
In a special statement broadcast live nationwide President Roh Moo-hyun said his country would pursue more FTAs, describing it as a matter of survival. "We've passed a key hurdle in the South Korea-U.S. FTA," he said, calling on Parliament to ratify the accord, hailed as "a springboard for (South Korea's) economy to jump into an advanced economy."
He said the issue of free trade accords is "not one of ideology anymore," but an economic trend that South Korea cannot afford to ignore. Roh pledged to make his country more an open economy with fewer trade barriers by clinching more free trade deals. He has vowed to push for FTAs with more than 15 countries before his term expires in February 2008.
South Korea plans to launch formal free trade negotiations next month with the European Union, the country's second-largest export market. Last year trade between the two sides reached $71 billion. The EU is also the largest foreign investor in South Korea, accounting for more than one-third of total foreign direct investment.
South Korea will also begin preliminary talks with China for a free trade deal later this year. China, which has been South Korea's largest export destination since 2003, currently accounts for 21 percent of South Korea's total exports.
During his visit to the Middle East last week, Roh floated the idea of forging a free trade accord with the Arab Gulf Cooperation Council comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Stronger economic ties with the oil-rich countries are necessary to energy-poor South Korea, which imports almost all of its crude-oil requirements, more than 80 percent of which comes from the Middle East.
South Korea has long remained out of the race for free trade zones. It was one of only two World Trade Organization members, along with Mongolia, that were not part of a free trade agreement before it clinched its first free trade accord with Chile in October 2002. The deal went into effect in April 2004.
In November 2004 South Korea concluded its second FTA with Singapore, which was ratified in September last year. It also has an FTA with the European Free Trade Association, consisting of Switzerland, Norway, Iceland and Liechtenstein, which went into effect in November 2006.
Negotiations are also under way with Mexico, Canada and the 10-member Association of Southeast Asian Nations.
Seoul's push for FTAs has gained further momentum as the country's free trade flag-bearer Han Duck-soo was endorsed by the National Assembly as the prime minister. Han, who has served as Roh's special adviser on free trade negotiations with the United States, took office Tuesday.
Economists say free trade deals are vital to South Korea's export-driven economy. The South Korean economy, the world's 11th-largest, is heavily dependent on exports. The total volume of its external trade amounts to 70 percent of the country's gross domestic product.
"South Korea is strongly urged to push for clinching more free trade deals, which will upgrade the country's export-driven economy," said Ro Sung-tae, president of the Korea Economic Research Institute.
