Korea Becomes 1st Asian State to Have FTA with U.S., EU

Ruling party rams ratification of KORUS FTA through amid strong opposition

The National Assembly unilaterally passed the long-stalled free trade deal with the United States, dubbed KORUS FTA, during a plenary session on Nov. 22.
Despite the free-for-all against the ratification from the members of opposition parties, including the Democratic Party and the Democratic Labor Party, the ruling majority Grand National Party (GNP) railroaded the ratification bill and 14 related measures through in the unicameral parliament. Out of 170 parliamentarians who participated in the voting, 151 lawmakers cast yes votes in the session with seven lawmakers voting against the bill and 12 others abstaining.
As Korea has followed suit on the heels of the U.S. Congress of the KORUS FTA, the pact is set to officially take effect next Jan. 1.
With the ratification of the KORUS FTA, Korea has become the only Asian country to have an FTA with both the United States and the EU. Korea is also the sole state in the world to have FTAs covering the United States, the EU, and the Association of Southeast Asian Nations (ASEAN). It means that Korea, which is set to break the $1 trillion trade barrier sometime in December, is now able to trade goods and services free of customs with the countries with FTAs in place, whose combined economic size is 30 times as large as Korea's economy.
Korea's ratification of the KORUS FTA came nearly four years after the initial negotiations were concluded under the late Roh Moo-hyun government on April 2, 2007, and the pact was inked on June 30 after additional talks. But the approval of the pact hit strong opposition under the current Lee Myung-bak government, from among others, the Democratic Party, which was the majority ruling party at the time of the conclusion of the pact, but now is only a major opposition party. The opponents primarily cited the investor-state dispute (ISD) settlement clause related to investments in their resistance to the FTA.
Earlier, President Lee met with party leaders and urged them to pass the pact on the condition that Korea would begin negotiations on the ISD clause with the U.S. side within three months of ratification.
However, mindful of solidarity and a possible merger with other opposition parties for the upcoming general and presidential elections slated for next year, the Democratic Party turned down President Lee's offer even though some DP lawmakers signaled their approval of the ratification.
Opposition sides have threatened to boycott the remaining term of the plenary session, so the approval of pending issues, including acting on the budget bill, is uncertain.
DP Chairman Sohn Hak-kyu said his party will launch a drive for the nullification of the KORUS FTA.
GNP lawmakers occupied the National Assembly's main hall in order to push through the ratification bill amid vehement protests from the opposition. Rep. Kim Sun-dong of the Democratic Labor Party detonated a tear gas canister that he had smuggled in at the Assembly speaker's seat in an effort to block the vote.
Around 130 GNP lawmakers moved to the main hall right after ending a general meeting around 3:30 p.m. Assembly speaker Park Hee-tae soon requested the lawmakers to complete their reviews on the trade bill by 4 p.m., using his authority to forward the bill straight to a vote on the floor.
The GNP controls the National Assembly with a comfortable majority of 169 out of 295 seats, which would have allowed it to unilaterally ratify the bill, but it could not ram through the ratification bill as opposition party members seized the foreign affairs and trade committee room to block the process.
Speaker Park Hee-tae had initially stuck to a principle of ironing out differences through bipartisan talks at the standing committee, but he finally changed his mind after the DP flatly turned down President Lee's compromise of seeking negotiations on the ISD settlement clause after the deal was ratified.
Business groups, including the Federation of Korean Industries, lauded the passage of the pact as a historic watershed in promoting trade, saying that it will have a positive impact on creating jobs in Korea.
U.S. Trade Representative Ron Kirk welcomed Korea's ratification of the FTA. "The United States welcomes the Korean National Assembly's approval of the KORUS FTA," he said in a brief statement issued on Nov. 22. "This is a win-win agreement that will provide significant economic and strategic benefits to both countries. We look forward to working closely with the government of Korea to bring the agreement into force as soon as possible."
Hundreds of protesters from some civic groups took to the streets, condemning the GNP's ratification of the pact, alleging that the deal will devastate the Korean economy. Facebook and other social network sites were flooded with words condemning the passage.
Rep. Jeong Tae-keun of the GNP went on a fast for eight consecutive days, calling for ruling and opposition parties to approve the KORUS FTA without resorting to violence, which had attracted words of encouragement from ruling party members.
Some DP lawmakers and confidants of the late President Roh Moo-hyun, including Incheon Mayor Song Yong-gil, favored passage of the KORUS FTA, becoming the subject of criticism from their own party.

BOOSTING THE KOREAN ECONOMY AND TRADE
The government says that the implementation of the pact will boost the nation's actual gross domestic product by some 0.48 percent in the long-term perspective and by 5.66 percent when factoring in production. It also said it will bring about economic benefits, including the creation of 350,000 new jobs. It will result in increasing Korea's exports to the U.S. by an annual average of $1.285 billion over the next 15 years, and imports from the U.S. will rise by $1.147 billion to improve Korea's trade balance by $138 million each year over the same period.
The beneficiaries of the implementation of the pact are industries such as automobiles, electric/electronics and aviation. The possible losers are such vulnerable industries as pharmaceuticals and agricultural sectors. nw

President Lee Myung-bak presides over a Cabinet meeting to discuss steps to protect from losses stemming from the implementation of the Korea-U.S. Free Trade Agreement at Cheong Wa Dae on Nov. 24.
Photo on courtesy of the MCST

President Lee shakes hands with Democratic Party Chairman Sohn Hak-kyu while visiting the National Assembly to urge opposition parties to ratify the KORUS FTA as Grand National Party Chairman Hong Joon-pyo looks on.
Photo on courtesy of the MCST