Critics Call for Urgent China-Korea FTA Ratification as Korean Exports Tumble
Critics Call for Urgent China-Korea FTA Ratification as Korean Exports Tumble
  • By Timothy Daniel (daniel83@koreaittimes.com)
  • 승인 2015.06.04 19:01
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Economics experts are calling for the Korean government to ratify a “potentially damaging” Korea-China Free Trade Agreement signed on June 1.

An editorial piece in the influential newspaper Joongang Ilbo slated the new deal, claiming that “industry insiders’ expectations are quickly ebbing.”

The editorial also read, “Korean companies must draw up a new business strategy aimed at China’s domestic market, which is worth KRW1.5 billion. Korean products and services must be targeted at ordinary Chinese consumers.”

The agreement covers sectors such as finance and Internet-based trade, although it stopped short of allowing free auto trade, with Korean carmakers expressing concern that Chinese products might otherwise “flood the market.”

Korean government officials said they expected GDP to rise by just short of 1 percent in the first 10 years after the FTA passes into law.

Financial experts have been quick to point out flaws in the deal, though and have questioned its timing, especially in the wake of the crushing financial news that Korean exports have tumbled by almost 11 percent from last month, the largest month drop for some six years.

Korea’s Central Bank Governor Lee Ju-yeol pointed out that export slowdown is now a global issue, rather than one that only effects Korea, but admitted that the economic impact could be large due to its reliance on global demand for Korean goods.

The KOSPI Index also took a tumble after the news broke, with a 1.1 percent drop reported. IT and mobile conglomerates a heavy hit, with SK Hynix experiencing a 2.4 percent decline.

Experts are now predicting a further cut in interest rates in a state-led effort to kickstart domestic spending rates. The Korean interest rate is currently at a record low of 1.75 percent.

International market experts have predicted the Korean economic slump may be systematic of wider global issues. Global financial analysts refer to the Korean economy as a “canary in the coalmine,” and warn that a weak Korean export rate is symptomatic of a wider global economic slowdown due to the fact that the Korean economy is so predominantly export-based.

Financial analysts at Barclays warned that a global slowdown may now be inevitable, and that hopes of a worldwide recovery amounted to wishful thinking. Barclays analysts released a statement that read, “There are not yet convincing signs of near-term stabilization in the economy. We believe risks to the outlook remain to the downside, with the property market correction and government-led infrastructure projects holding the key for the outlook."


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