Japan Press Weekly

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2013 February 27 - March 5 [ECONOMY]

Citizens learn about FTA’s negative impacts on South Korea

Japanese citizens on March 1 learned from a South Korean lawyer how a free-trade deal his country signed with the U.S. works in the interests of U.S. companies at a study meeting in Tokyo.

With Prime Minister Abe Shinzo’s announced-intent to join negotiations for the Trans-Pacific Partnership (TPP) agreement, the event was hosted by a nationwide network opposing Japan’s entry into the multinational free-trade pact, consisting of agriculture, forestry, fisheries, and consumers’ groups, in order to learn about the negative impacts of the South Korea-U.S. Free Trade Agreement (FTA) citizens in South Korea have had to endure.

Lawyer Song Kiho reported that although the bilateral FTA, concluded in March last year, was initially touted as a way to increase exports to the U.S., the reduction of tariffs led to an increased imports of U.S. cars into South Korea.

The free-trade pact has dealt the hardest blow to agriculture in his country, Song stated and explained as follows: All agricultural goods, except rice, will lose tariff protection. As a condition for rice to be an “exception” to the total elimination of tariff barriers, South Korea is obliged to increase in the amount of rice imports and engage in bilateral discussions whenever the U.S. wants to further ease the trade barrier.

Song raised the following examples that show how South Korea’s economic sovereignty is threatened under the FTA:

South Korea abolished in November its domestic system to subsidize lower-emission cars and impose an additional tax on higher-emission cars due to pressure from the U.S. claiming that that was against the FTA.

The South Korean government had to cancel its plan to raise the maximum limit on the amount of postal insurance taken out because the U.S. claimed that that would violate the FTA.

Bilateral discussions are now underway on South Korea’s insurance coverage standards and drug prices, which could threaten the country’s universal health insurance system. It is also a major concern that cheap generic drugs might become less available in the domestic market due to the extension of the duration of patent rights of the drugs.

The U.S. side complains about South Korea’s domestic system to support small- and medium-sized companies by designating business categories where large corporations are banned from entering.

Song also emphasized that investor-state dispute (ISD) settlement provisions in the FTA work to discourage the South Korean government from imposing necessary measures domestically.