Free trade agreements (FTA) with the US, Japan, China and Southeast Asia would put more than 100,000 South Koreans out of work over the next 10 years, a government estimate has said.
In a report submitted to parliament on Monday, the Ministry of Commerce, Industry and Energy said some 13,400 local companies would come under pressure to cut their work force amid mounting imports.
It was the first time that any government agency has published data on the estimated impact of the FTAs. Despite the forecast job losses, the ministry recommended pursuing the deals as a way to restructure the economy.
PHOTO: AP
"Survey results showed the impact on the country's industries would be great," the report was quoted as saying by Yonhap news agency.
South Korea has concluded an FTA with the ASEAN. Negotiations with the US resume this month amid disputes over the opening of Seoul's market for autos and pharmaceuticals and US anti-dumping measures.
South Korea also plans to enter talks on FTAs with Japan and China.
The report said the four FTAs would not only increase exports but also imports of cost-effective and high-end products from the three countries and ASEAN, pushing local businesses to either restructure or go under.
It said the service sector currently had much room for improvement and the manufacturing sector faced growing challenges from China and other emerging economies.
"We will aim to minimize losses from the FTAs and take this chance to turn industry around to become more competitive," the ministry said.
"We are still recommending FTAs as their benefits are greater than disadvantages," a ministry spokesman said.
Along with the report, the ministry asked for a budget of 1 billion won (US$1.1 million), including 760 million won for consulting services for the companies which would be hit hard by FTAs.
William Oberlin, chairman of the American Chamber of Commerce in Korea, said last week an FTA with the US would increase South Korea's economic output by 2 percent and create 500,000 new jobs. He gave no time frame.
Such an agreement would be the US' biggest deal since the NAFTA pact in 1994, marrying two economies whose bilateral trade totaled US$72 billion in 2005.
South Korea has seen a series of sometimes violent protests against any agreement, led by farmers who fear their lifestyle would be doomed by cheap imported food.
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