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Korea-US Free Trade Agreement worries Jeju primary producersStudies warn iconic Jeju products will be unable to compete with cheap imports
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승인 2011.12.09  10:49:32
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On Nov. 29, a week after ratification in the Korean National Assembly, South Korean President Lee Myung Bak signed a bill to implement a Free Trade Agreement (FTA) with the United States. Originally signed on June 30, 2007, the present agreement is a revision which will potentially remove all taxes from most trade products between the two countries.

According to the Office of the US Trade Representative, nearly 95 percent of bilateral trade between Korea and the US will become duty free within the next five years starting from a date yet to be decided.

However, the implications of this agreement are expected to have a negative influence on Korea’s primary industry, and studies show that the impact on Jeju’s economy as a whole will be grave.

According to the “Feasibility and Economic Effects of Korea•US FTA,” a study conducted by the Korea Institute for International Economic Policy (KIIEP), agricultural products from Jeju will find it difficult to compete with cheaper imported goods from America. Currently, approximately 14 percent of Jeju’s gross regional domestic product comes from primary industry.

The KIIEP estimated that Jeju may lose between 9 billion won (US$8 million) and 173 billion won ($153 million) worth of gross product due to the FTA in next five to 15 years.

Another research paper, published in 2008 by Seoul National University Professors An Dong Hwan, Im Jung Bin, and Choi Ae Sun, studied the inter-industrial and cross-border trade effects resulting from the impacts of the Korea-US FTA on the Korean agricultural sector.

It found that within Korea the FTA will have the worst economic impact on Jeju. It states that Seogwipo City and Jeju City will lose 70.6 billion won, and 58.4 billion worth of product within the next 10 years. This is twice as damaging as to mainland cities, such as Icheon City, Gyeonggi province (27.6 billion won), and Anseong City, Gyeonggi province (27.3 billion won). The paper also states that because of the tax reduction on imported fruits from the US, Jeju mandarin oranges, which account for a large portion of Jeju’s primary industry, will greatly suffer.

Jeju locals, and especially farmers, are anxiously watching the news.

“Of course I’m worried. From what I hear, those duty free oranges will start to be imported during mandarin harvest season. Competing with cheap oranges will be hard,” said Park Seung Gun, a Jeju mandarin orange farmer.

Jeju farmer Lee Shin Suk agrees. “The government’s support to help farmers is only benefiting large-scale farmers. With the FTA in effect, it will cause more trouble for small farm owners.”

Jeju politicians have heard the concerns of voters.

The provincial government has already taken steps to minimize the potential damage to the island’s economy, while also looking for effective ways to export Jeju products. It formed a task force in July, which consists of 74 specialists in five different fields. In addition, the government plans to invest more than 6.8 trillion won ($6 billion) on FTA related projects, in addition to the approximately 3 trillion won ($2.7 billion) already invested.

Nationally, though, potential damage caused by the FTA to Korean domestic fisheries and agricultural industries could range from 727.9 billion won ($706 million) in five years to 1.8 trillion won ($1.6 billion) in 15 years cumulatively, according to the “Feasibility and Economic Effects of Korea•US FTA” study.

The negative impact on agricultural revenues will lead to a decrease in production of other industries, resulting in a loss of 893.5 billion won to 2.1 trillion won in the next 15 years.

Along with its negative impact on Jeju, the FTA will have few positive effects for Jeju’s economy.

KIIEP found that in certain sectors including tourism, food and accommodation industries (13.5 billion won), education (8.8 billion won), health and medical industry (7.8 billion won), other service sectors (134.7 billion won) will garner an additional 183 billion won over 15 years.

Yet with estimated overall losses of 361 billion won during the same period, Jeju will not come out ahead financially as a result of the FTA. On the employment front, the KIIEP report estimates that 1,600 new jobs will be created during that time frame.

Of course, all the figures cited above are estimates. A variety of reports cite different figures, yet most of them agree on the fact that Jeju’s gross regional domestic product will gradually decrease.

The only thing that is certain at this point is the fallout from the FTA has everyone on Jeju worried.


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