Wednesday, July 19, 2006

US ROK FTA - Hijacking a blog

Jodi over at Asia Pages has an interesting front line report of sorts on the Korean perspective of the FTA. A banner displayed with some groups reasons why the FTA is a bad thing. There points, and my comments:

1. An FTA with the U.S. would result in foreign schools coming into the country. Such foreign schools would only be beneficial to upper-class Koreans.

Partially true. It could (depending on the final language) open it up to allow more foreign schools to come in. However it woudl not be  beneficial to only "upper-class Koreans". Again think of supply and demand. More schools mean more competition for students, which leads to lower prices and/or better service. Both of which would mean more than "upper-class Koreans" could put their kids in foreign schools.

For example consider the debate of the Yongsan school. The only reason there is controversy is foreign schools are limited here. If it was easier for the British School, or anybody, to open up a school not only would there be more seats, but also more selection for parents.

2. An FTA with America would result in the allowance of U.S. hospitals to enter Korea and as a result, all hospital fees will be greatly increased.

Again, a half truth. It may allow more hospitals in, but by the same reasoning above would likely lead to greater competition, more selection, better service, and better prices. I fail to see allowing new hospitals would raise prices.

3. An FTA with the U.S. would signicantly harm the Korean film industry as the screean quota would be altered to allow more U.S. movies to be shown in local theaters.

I actually doubt there will be a further decrease in the quota, the "damage" so to speak is already done and the US Is likely to yeild no more concessions here. That said, a change in quota does not FORCE anybody to show more US films. If a Korean theater only wanted to show Korean films, they could. It all depends on the market.

4. An FTA with the U.S. would result in severe suffering of rural citizens, especially farmers.

Define "rural citizens" and "severe". No doubt some in the farm sector will suffer. However those are declining in number. Why is there an influx of foreigen brides anyway? Simple, no people in the country. You have lower birthrates, and negative migration. Also it depends what the farmers are growing, rice maybe a hit, organic korean squash probably not.

5. An FTA with the U.S. would result in more Lone Star cases.

I would love to see the argument here. It sounds almost like this is a bald faced lie. If anything Lone Star happened due to the non-transparent and byzantine regulatory systems here regarding foreign investment (along with a healthy dollop of old-fashioned Korean corruption). An FTA my clear up some of the problems and make such cases less likely.

6. An FTA with the U.S. would result in a more open market, thus allowing American companies to make more money and bigger profits in Korea. what. One could make the opposite claim, "an FTA will open markets allowing Korean comaines to make more money and bigger profits in the US". Would the protesters say that is a fundementaly bad thing as well?

Also as well nothing is guaranteed. Look at the current pull-outs by Carrefour and Wal-Mart. Both "evil" forgein compaines thought they could make greater profits in Korea. They got slapped in the face and were bought out by locals (granted one could argue the lack of an FTA played a role in this). Anyway the upside here is the entry of both made Korea's entire retail and distribution markets more completive which benefited Korea as whole. 


Looking at most of these, especially the first few, makes me wonder what grasp of basic economics these anti-FTA groups have. Then again many of them are leftists, so one could cheekily argue they have no economic sense at all.


At July 19, 2006 6:55 PM, Blogger Mod_Mephisto said...

#5: Also, without an FTA who but the most opportunistic companies would want to come to the ROK? An FTA would make the ROK more attractive.

#6 I think all these arguments would be more valid, if the Doha Round succeeded. Bilateral FTAs allow for many more exceptions, because interest groups are closer to the negotiating parties.

Really, a choice between a good FTA and a better WTO is easy. I wonder if a world full of FTAs is any better than autarky.

At July 20, 2006 12:36 AM, Blogger Dram Man said...

Good points, however I disagree slightly about mulilateral agreements. I think Doha failed because so many were at the table. Mano-e-Mano leads to more concessions since you cannot play tag-team with other countries and block things.

However I so agree multilateral agreements are better over all since they simplfly trade in general which is the point anyway.


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