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SEOUL, March 14 (Yonhap) -- South Korea will mark the first anniversary of a free trade agreement (FTA) with the United States on Friday. After years of hard negotiations and ratification procedures, the free trade agreement, dubbed the "KORUS FTA," went into effect on March 15 last year, following a similar deal with the European Union that took effect in July 2011.
In general, the free trade deal has been viewed as a means to boost bilateral trade in spite of the global economic slump and help further the Seoul-Washington alliance. It seems that the controversy over the deal between its supporters and opponents has quieted down. What is important now is that South Korea should put in efforts to maximize the deal to bring in increased benefits to the economy and deal with outstanding issues and coming challenges in connection with the trade deal. The anniversary comes at a time the international economic landscape has been changing as the U.S. has pushed ahead with a plan to seal a free trade deal with the European Union and led the Trans-Pacific Partnership free trade negotiations involving 11 other Asia-Pacific countries.
According to the Korea Customs Service, South Korea's exports to the U.S. between March last year and February this year rose 2.67 percent from a year earlier to US$53.8 billion, while its imports from the U.S. came to $39.1 billion, down 7.35 percent on-year. During the reported period, the country's trade surplus showed a 44 percent growth. Experts, however, say the figures betrayed their expectations as a result of the global economic recession that has hurt overseas demand.
The sectors benefiting from the free trade deal logged more stellar performances. Oil products, auto parts and petrochemical products, among others, saw their shipments to the country increase by 32.8 percent, 25.5 percent and 18.9 percent, respectively. Another bright spot coming from the deal is a sharp 70 percent hike in U.S. investment in South Korea in the second through fourth quarter of last year.
At the juncture of the first anniversary of the deal's implementation, there should be various endeavors to heighten the trade deal's effect. One is to push the utilization of the deal higher. The rate of utilizing the deal by South Korean industries stands currently at 66.1 percent, which means they are given tariff benefits for nearly 60 won out of every 100 won of the country's exports to the U.S. More companies with sluggish exports to the U.S. and medium-size exporters are encouraged to take advantage of the deal.
Outstanding issues linked to the deal still remain. The government has been called on to reopen discussions with the U.S. side to delete or revise an investor-state dispute (ISD) provision enshrined in the deal. Critics claim the ISD provision could undermine South Korea's legal independence and take a toll on South Korea, as any type of ISD permits companies unhappy with their treatment in another country to seek resolution through arbitration in a third country. But South Korea needs to come up with a carefully designed strategy to address this issue as it could have some leverage in the face of increased pressure from the U.S. to lift restrictions on the beef trade.
Seoul and Washington also need to launch talks to discuss the status of products from the inter-Korean industrial zone in the North Korean border city of Kaesong, although the regional tension over North Korea's nuclear programs is expected to hamper the talks. Under the trade deal, the two nations are leaving the door open for goods produced in the industrial park to be treated as South Korean-made goods
Another pressing issue is to beef up the local farm and fishery industries and help sharpen their competitiveness as imports of farm and fishery products from the U.S. are to see their tariffs reduced in phases.
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