The Influence Of Han Zhi FTA On Korean Agriculture

Following the global development of the regional economies, and the gradual increase in demand for free trade, Korea has followed the trend of recognizing the importance of FTAs. Influenced by factors such as the WTO and the world-wide prevalence of both FTAs and RTAs between various countries, Korea has itself taken a proactive stance by signing its first free trade agreement with Chile. Analysis shows that Korea and Chile share several characteristics which make them suitable trade partners. Firstly, by calculating the trade intensity index and comparing the RCA index, we can see that the two countries already have a solid economic relationship, as well as different, but complementary, industrial structures. Secondly, in terms of the trade structure between Korea and Chile, before the commencement of the FTA, Korea’s main exports to Chile were motor vehicles, petroleum, coal, and different types of electronics; Chile’s primary exports to Korea were copper, ore, paper pulp, other raw materials, and agricultural products. Comparing exports of the top twenty products before and after FTA came into effect showed almost no changes in the exports. Thirdly, analysis of Korea’s agricultural production index and production along with the changes in economic value added proves that the agreement has not had a significant impact on Korea’s agriculture. Geographically close to each other, and sharing an East Asian cultural background, Korea and China share many cultural and historical ties. Moreover, in the political, economic, and social arenas, the two countries have complementary, not competing goals. Since establishing diplomatic relations in1992, trade has grown, bilateral communication has increased, and the two countries have become interdependent in many areas. All things considered, there are tremendous benefits to be gained from an FTA between Korea and China. Korea and China’s economic structures possess several attributes which an FTA agreement should take into consideration. Fistly, by calculating trade intensity index, south korea to china’s trade tightness closed to level2, and china to south korea’s trade tightness also closed more than level2. This shows that trade relations between the two countries are very close. Secondly, South Korea’s main exports to China are all in technology-intensive industries, such as electronics and optical equipment. China’s primary exports to Korea are electronics, machinery, computers, and steel, etc. Therefore, a future FTA between the two countries should be created on the foundation of an appropriate schedule of concessions. During the period of adjusting and eventually abolishing tariffs on bilateral trade, both sides should concentrate on agricultural products to achieve maximum efficiency. Additionally, any agreement should not only comply with WTO regulations, but also include protections of both parties’interests in the event that disputes arise during agricultural trade negotiations.