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Sat, Feb 04, 2006 - Page 12 News List

US-Seoul FTA could hurt farm sector, experts warn

AMBIGUOUS While South Korean officials predict a free-trade pact with the US would create 100,000 jobs, analysts said 140,000 farmers could be left unemployed


South Korean officials said yesterday that a free-trade agreement with the US would bring overall economic benefits to both countries, but analysts warned that poor Korean farmers would be on the losing end.

The US and South Korea agreed on Thursday to launch talks for a free-trade agreement (FTA), which US President George W. Bush said would expand the US' engagement in Asia.

If clinched, the pact would be the largest US free-trade accord in Asia, as South Korea is the third-biggest economy in the region behind China and Japan, with whom Washington has no such agreement.

It would also be the most significant free-trade accord in 15 years for the US since it signed an FTA with neighbors Canada and Mexico.

Stressing the positives, officials in Seoul cited research saying the FTA would boost South Korea's GDP by two percentage points or US$14 billion.

The study by the government-funded Korea Institute for International Economic Policy also said the FTA would lead to the creation of 100,000 new jobs here.

But Kim Jong-hoon, appointed as chief negotiator for the talks, admitted the trade pact would bring "some damage" to South Korea's already struggling agricultural sector.

"The government knows the difficulties faced by the agricultural sector. We will do our best in order to secure exceptions for sensitive sectors [for cutting or removing tariffs]," Kim said.

He added that the government had earmarked 119 trillion won (US$123 billion) to support farmers and help strengthen the competitiveness of the farming industry over the next decade.

The Korea Rural Economic Institute (KREI) said the FTA would result in additional agricultural imports of up to 3.2 trillion won every year and up to 140,000 farmers or 6.2 percent of all farmers would be put out of a job.

"Agricultural production including processed food would fall between 1.9 and 3.7 percent, worth between 1.15 and 2.28 trillion won," KREI analyst Kwon Oh-bok said.

Hours before the announcement on the start of negotiations, some 100 angry farmers staged a sit-in protest and broke up a public hearing organized by the foreign ministry on the impending talks.

"This is nothing less than a death sentence for us," Junnong, the national farmers association, said in a statement.

Juunong called for an "all-out" struggle to derail the talks.

"Farmers will be the losers and their pain will be great," said Choi Sei-kyun, another researcher at KREI.

Under a deal sponsored by the WTO and ratified in November by the National Assembly, South Korea agreed to open its rice market to import just under eight percent of its total consumption.

In return South Korea gets a 10-year grace period before it must open up fully to rice imports.

Kwon said the FTA was not expected to affect the WTO-sponsored rice deal.

"The South Korean government would simply be unable to cope with a backlash from farmers here," he said, noting the largely impoverished farmers typically depend on rice for about half their income.

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