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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

The Korea-US FTA and the Korean Economy

The Korea-US FTA and the Korean Economy

PARK Hyun-Soo

June 1, 2007

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Abstract

Korea stands to benefit substantially from the pending Korea-US free trade agreement. The immediate benefits include recovered credibility with trading partners, decreased reliance on the Chinese market, and increased security cooperation with the United States. Yet, opposition to the FTA has been and continues to be highly vocal.

Detractors claim that the FTA will damage the agricultural sector, exacerbate income inequality, and infringe on national sovereignty. Such arguments are wholly without merit. The proof can be found in previous FTAs opposed by the same detractors. Those agreements have had minimal impact on agriculture, have improved income distribution, and have applied fair and reciprocal rules to their signatories that are not infringements on sovereignty.

Opponents of the FTA also complained about the "secretive nature of the FTA negotiations and declared that the talks should have been open to the public. Such views exhibit an immature understanding of the nature of negotiations, which inherently require discretion, and the nature of diplomacy and trade, which calls for compromise on both sides of the table.

Over the long term, the FTA can exert salutary effects by spurring restructuring in the Korean economy, accelerating deregulation, encouraging the formation of regional alliances in East Asia, and improving the outlook for security on the Korean peninsula.

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