THE RAIN was pouring down along with thunder lights striking from time to time on July 12, 2006. The weather itself, however, could not stop some 300 anti-FTA civic groups, including the trade unions and farmer groups, from joining the massive protest outside Seoul City Hall. "No. No. FTA!" cried out Lee Du-ri (Col. of Law, Sungkyunkwan Univ.) holding the picket sign with a big black X on the front. "I came here to support our farmers. This is a hasty decision for the future of Korea. We have nothing to gain but a lot to lose [from this agreement]." With 20,000 riot police on guard in case of violent and threatening behavior, the protest went on filling all the streets of Jongno.
Meanwhile, on the same day, more than 10 pro-FTA organizations, including the Christian NGO and the New Right Union,  also went out on the streets and raised their voices against the anti-FTA protest. "National interest should be thought over rationally. 'Objecting for the sake of objection' is not rational," said Soh Kyung-suk, Co-president of the Christian NGO. "We are currently living in a world of free trade. Korea cannot develop unless it opens up its economy and freely competes with foreign countries."
According to a survey of 240 Yonseians (male: 146, female: 94) conducted by The Yonsei Annals from Aug. 11 to 14, about 48% of the students polled replied that they were interested in the KORUS FTA. However, only 9.2% of the students knew about the negotiation procedures and the expected effects precisely. The facts and opinions about the KORUS FTA have been somewhat distorted in the mainstream media because they were used to support their respective standpoints. To help Yonseians get a grip on what the issue is all about, this special report offers facts straight from the raw materials and opinions based on genuine interviews done by the Annals reporters, while maintaining an objective point of view.
A rise in regionalism
The term 'regionalism' can be found in various fields from economics to politics in general. Regionalism is a term used in international relations that refers to the integration of institutions, mostly for economic purposes, within the boundary of a geographical region. A typical example would be the EU (European Union), which eventually became a political body after being economically integrated for more than 40 years. Regionalism, which appeared in the 60s along with 'globalization,' was not widely adopted because of the notion that globalization in economy could function without regional economic integrations. The so-called 'New Regionalism' surfaced from the 90s due to the limitations of the multilateral GATT (General Agreement on Tariffs and Trade), the conclusion of regional blocs such as EU and NAFTA (North American Free Trade Agreement), and the concern of countries excluded from the EU and NAFTA that they might fall behind. Under the system of WTO (World Trade Organization), recent world trade environments demonstrate a tendency of regionalism by concluding FTAs.

About the FTA
A FTA is an agreement signed to encourage free movement of commodities or services between countries in order to accelerate trade liberalism and achieve promotion in trade. As one of the lowest steps of economy integration of diverse RTAs (Regional Trade Agreement), a FTA is a two-party and regionalism preferential trade system. Before the 70s, only 5 FTAs were made, but after year 2000, there has been a drastic increase in the number of agreements that came into effect (12 in the 70s, 10 in the 80s, 64 in the 90s, 95 after year 2000). The traditional FTA usually concentrated on liberalizing the trade of commodities and lowering customs duties under the GATT system. However, after the establishment of WTO, DDA (Doha Development Agenda) was devised in order to eliminate non-tariff barriers globally. The application range of the FTAs also expanded, and the negotiation objects extended to a level which leads to a harmony of policies in environment, labor, intellectual property rights, governmental procurement, and competition policy. More and more FTAs are expected to be promoted actively due to changes in the current global economy including the recent collapse of WTO's DDA.
Theoretically, the merits of agreeing on free trade are that the import and investment of goods with comparative advantages can be promoted if the market expands. The nation can also become more competitive economically and improve productivity by attracting foreign direct investment and competition. However, a significant demerit is that relatively less competitive industries can fail, and side-effects can occur according to a nation's own circumstances. Prof. Kim Choong-soo, (Graduate School of Pan-Pacific International Studies, Kyunghee Univ.) claimed in an international conference that FTAs without accompanied systemic reform, may only bring about negative effects. He stressed that Mexico, having failed in restructuring and system innovation after concluding NAFTA, is now suffering from a low economic growth rate and a widening wealth gap between the rich and the poor.

Korea? FTA plans
Until 1998, when multilateral principles were emphasized, regional or bilateral FTAs were not considered as Korea's trade policy. It was November 1998 when the promotion of FTAs was officially confirmed as a trade policy. The early FTA strategy can be rated as a mere 'passive' dissemination policy to steadily increase FTA partners. However, the Roh Administration stressed an 'active' policy and promoted FTAs with huge advanced economic blocs resolutely to maximize benefits. In this sense, the Korean government's strategy has been geared toward concluding 'comprehensive and high standard' FTAs while maintaining a 'multi-track approach.'
In the FTA Center of MOFAT (Ministry of Foreign Trade and Affairs), the government presented two main reasons for promoting FTAs actively. One reason is to minimize damage that can be caused by not concluding FTAs, such as losing price competitiveness, which eventually leads to the loss of oversea markets. Another is to develop overall national systems and strengthen economic structure through active market-opening. To achieve these goals, Korea is promoting FTAs with more than 20 countries all over the world, including the ASEAN, Canada, Mexico, Japan, India, China, MERCOSUR and the U.S. As of now, Korea has agreed to begin negotiating with some countries and is in the process of conducting research with others.

Advent of the KORUS FTA
In this context, the Government Information Agency explains that the government has planned the overall FTA strategies since August 2003 and has concluded FTAs with bridgeheads of each continent (Chile: Central and South America, Singapore: ASEAN, and EFTA: EU). Based on these experiences, the government decided to promote FTAs with huge economic blocs in order to maximize economic effects. Meanwhile, TPA (Trade Promotion Authority: a law operated in the U.S. that mandates trade agreement legislation to the Administration), which played a big role in promoting FTAs, is set to expire in July 2007. The U.S.'s intention to conclude a FTA before the expiration of TPA met Korea's call for the negotiation.
The KORUS FTA is needed for national interest according to MOFAT. "We have to see the bigger picture and make judgments based on the facts," said Kim Won-kyong, Director of KORUS FTA. MOFAT offers two reasons for its stance. First, under Korea's unique historical circumstances and fate, the way to survive is through free trade and opening the doors to engage powerful countries and induce them to have stakes in the nation. "Placed at a geopolitically important position, Korea cannot escape  the interests of powerful countries. In this sense, for economic prosperity, Korea needs to engage the U.S. in its economy to benefit from locking-in the biggest market in this rapidly changing international trade environment," added Kim.
MOFAT stresses that another effect of the FTA is the acquisition of technology through strategic partnership. "Technology is the most important factor in economic growth. Concluding a FTA can help pave the way for technological development," said Kim. In addition, Dr. Lee Si-wuk, a KDI (Korea Development Institute) researcher, agreed that this FTA can help Korea obtain advanced technology and bring in an R&D spill-over effect in order to encourage the innovation capacity of technology, which will boost overall productivity.

Process of the KORUS FTA
The first round of the KORUS FTA talks started on June 5 in Washington. After exchanging the bound agreement document, specific conditions for the items on the table were to be arranged later on during the second round. However, Korea and the U.S. have made little progress in the second round of free trade talks in Seoul from July 10 to 14. "We have made advance-ment in narrowing differences on simple areas, but we have not made significant progress in the major substance of the talks," said Kim Jong-hoon, Korea's chief negotiator, during a press conference. Korea and the U.S. reached an impasse in the middle of the talks, failing to make any progress in the area of pharmaceuticals and medical equipment. When the second round of talks came to a halt, there were rumors that this negotiation might break down. However, the KORUS FTA was back on track as of August 4, as the U.S. decided to accept the 'positive list system' for medical supplies proposed by the Korean government.
In May, the Ministry of Health and Welfare announced the 'positive list plan'  to cut down the prices of medicine manufactured by foreign companies in order to reduce the soaring insurance coverage. Up until now, insurance covered most drugs regardless of their prices, as long as they were approved by the Korea Food and Drug Administration, and were widely prescribed by doctors. However, under the positive list system, the government is to determine a list of drugs that will be covered by insurance  according to price and efficacy through a strict screening process. U.S. pharmaceutical firms opposed the new system, arguing that it would threaten the competitiveness of American companies, which create most of the new drugs, by having to face red tape and the inconvenience of applying to get on the list.

The third round of talks, which will be held in Seattle from Sept. 6 to 9, is expected to be the most decisive as well as devisive. Korea and the U.S. now roughly know each other's thoughts and plans. "The third round of the talks will be like a tug of war between Korea and the U.S.," said director Kim Won-kyong. "We will be going into the real game now." There are a lot of items to negotiate in this round, and the talks will be focused particularly on specific details of the positive list systems. Furthermore, the so-called 'bounded lists,' which list items that can be opened for competition, are to be exchanged in the upcoming talks. Seoul and Washington are aiming to conclude the talks by March 2007.

Shared problems of the KORUS FTA
The government should not proceed into the KORUS FTA with an idealistic view, optimistically expecting a successful conclusion. There are major problems in the negotiation process to which both pros and cons of this FTA agree. Public opinion against the KORUS FTA has arisen not only due to problems in the FTA itself, but because of the major mistakes of the government, both before and after the negotiation periods.
First of all, even the proponents of this FTA admit that the government has promoted this negotiation in a hurry without sufficiently gathering people's opinions. "This negotiation is a little bit out of the blue," argued Prof. Kang In-soo (Dept. of Economics, Sookmyung Women's Univ.) "The government publicly claims to have been preparing this trade pact since before 2003, but as far as I know, this FTA was propelled by the president and
administration around 2005." Critics on

both sides argue that this FTA has not been planned early enough to achieve good results from the negotiation procedure.
Problems still remain in that the government exaggerates and lies to the public in order to appeal only the positive sides of the KORUS FTA. For example, the public hearing for gathering opinions was held just a day before the announcement of entering the negotiation, which can be seen as a formality. On the  National Briefing website, a manipulation of interviews was also disclosed. The Hankyoreh 21 (weekly magazine) even called it a 'propaganda' for showing only the positive side. To implement policies effectively, it is important to win the sympathy of the public and to settle conflicting opinions, but the government is busy reporting only the bright side of the FTA with overstatements.
"The biggest problem is that what the government is trying to achieve is not clear. The officials say that completing FTAs will bring foreign investment and profits by free trade, but that's impossible for the present," said Prof. Lee Jay-min (Dept. of Economics). Publicity activities should be continued energetically by analyzing both the positive and negative aspects in order to allow people to think more rationally and make the right decision. Its impacts on both Korea's economy and politics should also be considered and shared at least once more in order to induce support from the people.
Lastly, there are not enough counter-measures prepared to protect vulnerable industries. The Korean agricultural sector, composed mostly of small-scale farmers, will especially suffer, hit with irreparable damage. However, the government is only increasing emergency support for the farming sector. It needs to be reformed structurally in order to survive in the age of free trade. In addition, social safety nets such as restructuring organizations and providing reeducation programs for anticipated layoffs are crucial for the immediate future of Korea. If the government cannot come up with an adequate reform system, the danger of inviting ill-effects upon the economy looms large.

The need for a national consensus
The controversy over whether this FTA is going to be a good solution for Korea's currently falling economic status is getting hotter and hotter. This FTA issue is crucial for the future of Korea and will be remembered as a hot issue of 2006. The government and specialists in this field should try to guide the society without making it fall apart, for the better sake of national prospects.
There is no doubt that if certain domestic conditions are met, this KORUS FTA will be a good chance for Korea to take another big economic leap. A more liberalized trade relationship is expected to help Korea secure its grip on a major export market, while strengthening diplomatic ties and boosting national security.
However, problems discussed in this article should be looked over again in order for Korea to take advantage of the trade pact. A national consensus can be achieved along with better understanding of the KORUS FTA through the government's proper publicity activities. Without any safety nets in this age of free trade, some of Korea's economic sectors might collapse sooner or later, whether the FTA is accomplished or not. The government should not focus only on the quantity of development but also on the quality in order for Korean market to be stable in the coming decades.

TIMELINE OF THE KORUS FTA

Here's the process of how the Roh Administration is promoting the KORUS FTA and the public's reactions toward the policy.

Aug. 2003 KOREA'S FTA ROAD MAP ESTABLISHED

Feb. 3, March 28-29, April 28-29, 2005 PREPARATORY MEETINGS HELD (Seoul, Washington, Washington)

Jan. 26, 2005 SOUTH KOREA DECIDED TO HALF THE 'SCREEN QUOTA'

Feb. 2, 2006 FIRST PUBLIC HEARING HELD

Feb. 3, 2006 SOUTH KOREA AND THE UNITED STATES ANNOUNCED THEIR INTENTION TO  NEGOTIATE FTA

March 28, 2006 KOREAN ALLIANCE AGAINST THE KORUS FTA FORMED

April 15, 2006 FIRST NATIONAL RALLY AGAINST KORUS FTA HELD

June 5-9, 2006 FIRST ROUND OF OFFICIAL KORUS FTA TALKS HELD IN WASHINGTON

June 27, 2006 SECOND PUBLIC HEARING HELD

July 10-14, 2006 SECOND ROUND OF OFFICIAL KORUS FTA TALKS HELD IN SEOUL

July 12, 2006 SECOND NATIONAL RALLY AGAINST KORUS FTA &  RALLY FOR KORUS FTA HELD

Aug. 11, 2006 COMMITTEE FOR FACILITATING THE KORUS FTA FINALIZATION ESTABLISHED

[Still a long way to go]

Sep. 6-9, 2006 THIRD ROUND OF OFFICIAL KORUS FTA TALKS IN SEATTLE

October & December 2006 FOURTH & FIFTH ROUND OF OFFICIAL KORUS FTA TALKS 

June 30, 2007
KORUS FTA TO BE SIGNED

The current government is advertising only the benefits of the KORUS FTA.

What is your position on the KORUS FTA?

Strongly Negative (7.5%)

Strongly Positive
(1.3%)

Positive (25.4%)

Neutral (35.8%)

Negative (30%)

Numbers
47.5%of the Yonseians are interested in the KORUS FTA

However, only 9.2% know about the KORUS FTA's procedures and effects precisely

75.8% expect that the agricultural and livestock industries would suffer the most from this FTA

61.3% agree on the current government's 'multi-track approach,' but add that the government needs to be more careful

Respondents
Total
Sex
Male
Female
Grade
Freshman
Sophomore
Junior
Senior
Unidentified
Surveyed period : Aug. 11-14
*The survey was not conducted through random sampling, and therefore may contain statistical errors.

240

146
94

 68
65
50
56
1