With regional trade agreements (RTAs) expanding in the 1990s and 2000s, Korea also joined the trend. It was inevitable for the country, highly dependent on trade, to push for FTAs because no FTA puts any country in an unfavorable situation compared to other competing countries. Releasing the FTA Road Map in 2003, Korea has pursued simultaneous FTAs with major economies to conclude high-quality and comprehensive FTAs. As of January 2010, the country has signed seven FTAs, with five having gone into effect, and more than 10 FTA negotiations are underway. In particular, the economic impact(Lee and Lee, 2005) of the Korea-US FTA (concluded in 2007) and Korea-EU FTA (signed in 2010) on the Korean economy is expected to be comprehensive and substantial because Korea’s commitments agreed in these FTAs are more far-reaching than any other FTAs Korea concluded before. As a result of such FTAs, Korea is expected to strengthen and advance its economic system and to see quantitative and qualitative improvement in growth potential through increased access to foreign markets.
Table 4-5. Korea’s current status of the FTAs
With a number of FTAs coming into force, Korea has seen increasing exports but witnessed little surge in imports despite initial domestic concerns. As seen in the Table 4-6, the utilization rate of the preferential tariffs shows how well the signatories have utilized the FTAs’ lower tariff advantages. There are still problems waiting to be solved in relation to the FTAs, including how to deal with domestic economic restructuring as more FTAs are concluded and how to distribute the benefits of the FTAs.
Table 4-6. The utilization rate of preferential tariffs
Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.
