Q&A

Chul Chung

Chief Economist, Korea International Trade Association (KITA)

“Time is now the enemy”

A private association representing some 65,000 member companies, KITA is Korea's foremost trade promotion organization. Recently returned from an extensive U.S. road trip promoting the pending United States-Korea Free Trade Agreement (KORUS FTA) along with Korea's U.S. Ambassador Han Duck-soo, Dr. Chung talks trade issues, bilateral relations and expectations for November's G-20 Summit in Seoul.

CHUNG

“What would other countries say if we have this great relationship but cannot pass this trade agreement? It would be a joke.”

KORUS FTA WAS SIGNED IN 2007, BUT STILL AWAITS CONGRESSIONAL APPROVAL. WHAT ISSUES NEED TO BE RESOLVED?

While there is widespread support from the U.S. government and U.S. agricultural, manufacturing and service sectors, the American auto industry and some Democrats are concerned that the deal will not benefit U.S. automakers, and may put them at risk.

WHAT IS YOUR ANSWER TO THAT?

KORUS FTA is a complementary, not a competitive, deal, exclusive to Korea and the U.S. Many Korean cars are already manufactured in the U.S., in Alabama and Georgia for example, and with more Korean cars selling in the U.S. under KORUS FTA, that would mean more auto- related jobs in the U.S.

WHAT IS AT STAKE FOR THE U.S. IF KORUS FTA DOES NOT GET PASSED?

Eight percent of Korean tariffs on U.S. merchandise exports would be instantly eliminated, giving U.S. manufacturers and firms a competitive edge and, by the U.S. Commerce Department's estimate, creating about 70,000 new jobs. If we cannot pass this—and with the Korea-EU FTA now completed and the Korea-Canada FTA progressing—the U.S. could lose about 345,000 jobs, its competitive edge in Korean markets and investment flows between the countries. It's been three years since we signed—time is now the enemy.

WHAT IS THE VIEW ON KORUS FTA IN KOREA?

A mix of support and opposition, as in the U.S. There could be negative impact on farmers, small and medium-size manufacturers, and some service sectors, but the Korean government, the National Assembly and the business community all understand that KORUS FTA can help upgrade the whole system of Korean business and economy. The proposed tariff reductions and eliminations will level the playing field and mean more competition for Korean companies. This might be hard at first, but it will be a good prescription for advancing Korea as a whole.

HOW DO RELATIONS STAND BETWEEN KOREA AND THE U.S.?

The bilateral relationship between Korea and the U.S. is the best it's ever been. President Obama and President Lee Myung-bak have said the relationship is very solid, with our alliance even tighter following North Korea's recent sinking of a Korean Navy ship. As we commemorate the 60th anniversary of the Korean War, Korea will never forget how U.S. soldiers fought for our freedom and democracy. Indeed, that sacrifice is the seed of our prospering economy today—and another reason KORUS FTA must pass. What would other countries say if we have this great relationship but cannot pass this trade agreement? It would be a joke.

WHAT'S ON THE G-20 AGENDA IN SEOUL THIS NOVEMBER?

We think chairing the G-20 Summit is a historic event for Korea. In addition to talking about world markets and financial reform, we want to put development on the agenda. Only 19 nations plus the European Union belong to the G-20, which leaves out 173 of the world's 192 countries. In Seoul, we would like to embrace non-G-20 countries and pay more attention to those yet to have the opportunity to develop their economies.