Free Trade Deals to Put 100,000 South Koreans out of Work

Posted 02 January 2007 @ 11:35 am EET     Print     Reprint     E-Mail     Comments

SEOUL (AP) - Free trade agreements with the United States, Japan, China and Southeast Asia would put more than 100,000 South Koreans out of work over the next 10 years, according to a government estimate.

In a report submitted to parliament, the Ministry of Commerce, Industry and Energy said some 13,400 local companies would come under pressure to cut their workforce 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.

"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 Association of Southeast Asian Nations. Negotiations with the United States resume this month amid disputes over the opening of South Korea'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 minimise 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 told AFP.

Along with the report, the ministry asked for a budget of one billion won (1.1 million dollars), 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 United States would increase South Korea's economic output by two percent and create 500,000 new jobs. He gave no timeframe.

Such an agreement would be the United States' biggest deal since the North American NAFTA pact in 1994, marrying two economies whose bilateral trade totalled 72 billion dollars 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.