한국해양대학교

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한·미 FTA 농업부문의 문제점과 한국의 대응전략에 관한 연구

Title
한·미 FTA 농업부문의 문제점과 한국의 대응전략에 관한 연구
Alternative Title
A Study on Korea-USA FTA on the Korean Agricultural Sector: Issues and Counter Strategies
Author(s)
류해율
Publication Year
2007
Publisher
한국해양대학교대학원
URI
http://kmou.dcollection.net/jsp/common/DcLoOrgPer.jsp?sItemId=000002176196
http://repository.kmou.ac.kr/handle/2014.oak/10571
Abstract
This study aims to analyze the impact of the Korea-USA FTA (hereinafter "KORUS FTA") on the Korean agricultural sector, and suggests the strategies to cope with the opening of the Korean agricultural market under the KORUS FTA. To satisfy the aim, this paper proceeds as follows:

An the introduction, the background, purpose, scope, method, and the innovative points of this paper are presented.

Chapter 2 provides a brief introduction of the KORUS FTA followed by a theoretical review on the FTA. The first part of this chapter explains various aspects of the FTA, including the definition, characteristics, present conditions, and the economic effects. The FTA is a regional trade agreement, which promotes intra-regional trade and liberalization of the investment among the member countries, and yet allows the member countries to maintain their trade policies autonomy. For that reason, the number of FTA has shown astonishing growth and expansion recently. The second part mainly discusses on the KORUS FTA and its importance with focus paid to the agricultural sector. The FTA with the US is an opportunity for Korea to boost its economy. In particular, it will allow Korea to diversify its exports, offering a chance to regain its competitiveness in areas of apparel, textile and footwear, as the US lowers tariffs on these import items from Korea. At the same time, Korea can expect a greater inflow of foreign direct investment into its knowledge-based service industries as well as culture industry
its domestic market will strengthen, leading to greater domestic consumer spending. However, the US hopes to open Korea's agricultural market due to its strong advantages in the farming sector. Because of its weak competitiveness, Korea has emphasized the need for a grace period in the agricultural sector.

In Chapter 3, after introducing the status quo of agricultural sectors in Korea and the US, their agricultural trade relation is explored. In addition, the comparison of competitiveness in the agricultural sector between two countries is made. Agriculture is considered the major sticking point of the KORUS FTA. Korea's average applied tariff on all goods and services is 11.2 percent, more than three times that of the US figure. But on agricultural products, the Korean average tariff is 52 percent, more than four times as large as the US average. In 2005, Korea exported $280 million of food products to the US, making it this country's second-largest export market for such products after Japan. But Korea imported about $2.1 billion of farm goods from the US suppliers, recording a deficit of $1.9 billion. The increase in the volume of deficit in agriculture trade is attributed to the weak price competitiveness of local produce. If tariffs on agricultural products were reduced or eliminated entirely, there would be a rise in imports of the US products and a fall in domestic production. Estimates of the size of that drop range from 1 trillion won ($1 billion) to 8.2 trillion won.

Chapter 4 probes into the economic effects of the KORUS FTA on the Korean agricultural sector, and subsequent policy implications for the Korean economy. This is done under the framework of the computable general equilibrium(CGE) model. According to the CGE simulation results, the Korean agriculture sector will be damaged by the KORUS FTA in terms of both production output and welfare reductions to the Korean agricultural sector, but the analysis shows that these reductions will be less severe than expected, due to the trade-increasing effects of the FTA.

Chapter 5 addresses the US' FTA strategies on the agricultural sector. As a “multi-purpose” FTA encompassing both commerce and security, the KORUS FTA stands to harmonize the economic interests between the two nations and efficiently control their growing mutual reliance as well as fulfill the strategic diplomatic requirements of the two nations. From the US perspective, the KORUS FTA could serve to counter a rapidly growing China since Korea is a major supplier of intermediate materials (85 percent of Korea’s export) used for China’s export to the US. If the agricultural problems are smoothly resolved during the KORUS FTA negotiations, it will serve as a useful example for applying pressure on Japan during later commercial negotiations.

Despite Korea's place as one of the top destination for US agricultural exports, US government and agricultural industry officials contend that Korea retains a number of tariff and non-tariff barriers that have stunted US bilateral exports. Korean agricultural tariffs are particularly high compared to the US and most OECD members. According to USTR, Korea's average applied agricultural tariffs are 52%, more than four times the US average. The completion of a comprehensive FTA therefore is to dramatically expand US agricultural exporters' access to the Korean market. US agricultural exports will increase by more than 200% within four years after the KORUS FTA is implemented. Korea's farmers, while shrinking in terms of population and contribution to GDP, remain a politically powerful force in Korea.

Chapter 6 presents issues on the KORUS FTA and Korea's counter strategy. In the first part, the author points out issues on the following three sections: trade and competitiveness, agricultural productivity and income distribution, and US' trade and negotiation strategy. The second part of this chapter sets forth Korea's negotiation and counter strategy for the KORUS FTA. For the counter strategy, five measures are suggested: firstly, the strengthening of international competitiveness in the agricultural sector, secondly, the improvement in direct payment system as a farm income support policy, thirdly, the increasement of off-farm income, fourthly, the introduction of a farm price insurance system, and lastly, the extension of self-help funds.

In Chapter 7, the author concludes the study. The KORUS FTA is expected to have positive effects on the Korean economy and industries, but the production value of farm produces and agricultural income will decrease more than that of the years prior to the KORUS FTA. Therefore to ease the FTA shock to the agricultural sector, it is important to make an effort to negotiate for maximum benefits to the farming population, and to extend over a long period of time on the diminution or abolition of tariffs on agricultural products in the KORUS FTA negotiations. And the comprehensive measures for agricultural and rural development by the Special Law for FTA need to be enforced. In additional to these, it should be enhanced the competitive power of the Korean agricultural products in quality and safety, compensated for the income loss stemming from the FTA. It is also important that the agricultural production and marketing system should be re-tooled to cope with the opening of the domestic agricultural market under the FTA.
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