Korea and FTAs: Japanese Perspective

Here is the basic Nokyo perspective on Korea.

Korea was a latecomer to the FTA business with respect to Japan, and really only got serious about it in 2003 when they released an FTA "roadmap."

By 2006, Korea had signed with Chile and Singapore as well as with Switzerland, Norway, Lichtenstein, and Iceland in the EFTA. In 2007, an ASEAN trade agreement came into effect, and in 2009 another service-based trade agreement came into effect. In 2010, an agreement with India came into effect, Korea came to an agreement with the US and signed with the EU.

The Korean economy is heavily dependent on exports (around 54 % to Japan’s 18), so FTAs were really supporting all this.

Because the government strongly supported the Korean zaibatsu, an increasing gap appeared between the big companies and SMEs. Intermediate materials and parts could be imported just as cheaply, and less was needed from the SMEs, which just intensified the problem. Korea had a huge trade deficit with Japan, because the more they exported, the more intermediate goods they imported from Japan. More exports did not mean more employment. Korea became a country with a very low rate of employment for university graduates.

The disappearance of SMEs affected agriculture as well. The number of full-time farmers is higher than Japan (58 percent). However, among those, 55 are one generation farms, 34 two generation, and 11 percent three generation. And each farm has overwhelmingly one or two people, which means one elderly person or an aging couple. There are not enough farmers.

And look at farm incomes with respect to household expenses. In 1995, it was 71 percent, but by 2000 it had dropped to 61 percent. So farmers have to work out, but with the SME group weakening, there are few opportunities in farming villages. People are leaving farms in Korea. Of course in Japan, older people born early in the Showa period are moving off the farms, but in Korea, it is young healthy people who leave the farms.

There we have have the position of Japanese agriculture on Korean agriculture.