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FTA (Fast Talk Agreement or Food..Talk.....Agree) ?

Published Sunday, April 08, 2007 by SaiRay | E-mail this post

Did everybody read the news ? I was stun and speechless when read that S.Korea are signing the FTA with US just on time before the deadline. I mean there is surely a great and valid reason for this fast track approval which would had benefit both parties in the long term as well as pushes the economy of both countries up a notch.

I mean imagine US a country with tremendous market opening up and with no import duties and etc.........while S.Korea most likely have to reciprocate. Nevertheless, the way I see it is you win some and you lose some. No matter what, S.Korea market is not as huge as US therefore perhaps some sector or industry might have fierce competition while opportunity are aplenty else where. Now, I wonder why this common sense stuff is so hard to be figure out by our 'clever' minister ???

From my understanding with regard to the FTA, US negotiator didn't demand or make many request. However, we had substantially make 600++ product request for duties and tax exemption and etc. The only torn in the rose was US requesting Malaysian government to open up their procurement and implement more transparency measure for fair and equal competition so that foreign firm can bid for projects and etc locally. Currently its all enclose and nobody knows how are tenders of project awarded ! Therefore foreign firm especially US are losing out in the engineering and technology sector to Japan and Korea firm.

Read about it !!

WITH just 22 minutes to spare before the March 31 deadline, South Korea and the United States struck a deal for their bilateral free trade agreement (FTA). Touted as the largest free-trade pact since the North America Free Trade Agreement (Nafta) in 1994, it will be closely watched by other trading partners, economists and analysts.

Two-way trade between the US and South Korea is forecast to increase to between US$90 billion (RM315 billion) and US$100 billion over a few years from US$75 billion last year. Nearly 95 per cent of bilateral trade in consumer and industrial products will be duty-free in three years and most other remaining tariffs are to be abolished within 10 years.

Under the pact, South Korea agreed to drop tariffs and other restrictions on imported cars with an engine capacity of below 3,000cc and within three years for bigger cars. The US too will drop the tariff on South Korean cars over three years and tariffs on larger pickup trucks will be eliminated over 10 years.

In agriculture, one of the most sensitive items for both countries and indeed in the multilateral trade talks under the auspices of the World Trade Organisation (WTO), rice is excluded from the agreement. South Korea will maintain its tariffs on oranges, beans and other agricultural products and tariffs on beef will be phased out over 15 years.

With the partial liberalisation of the agricultural sector, which accounts for about four per cent of national output in South Korea, there will be a restructuring of the politically sensitive sector. However, farmers will be compensated for the "loss of income" with an allocation of US$1.27 billion by the government. It is estimated that currently two-thirds of their incomes are derived from subsidies. American farmers too are heavily subsidised, as are those in Japan and the EU.
But not everyone is jumping for joy with the agreement between the world’s largest economy and its 11th-largest. The agreement must be approved by both the National Assembly in South Korea and by Congress in the US before it can be enforced. With increased protectionist sentiments in the US and indeed in South Korea, where presidential and parliamentary elections are looming, securing an agreement at the last minute "was the easy part". And even so the deal is narrower than the two countries had planned at the outset.

Some believe that the agreement will trigger a wave of trade deals across the region and beyond. Japan, for example, has already signalled eagerness to restart negotiations with South Korea stalled since late 2004.

Tokyo’s Chief Cabinet Minister Yasuhisa Shiozaki is reported as saying that Japan is "ready to resume FTA negotiations (with South Korea) at any time and will intensify our call to restart the process at an early stage". Japanese Prime Minister Shinzo Abe said a free trade agreement with the US was something "Japan needs to consider as a future topic".

The European Union (EU) and South Korea are set to resume their bilateral negotiations. Bilateral trade between EU and Seoul at US$70 billion is almost as big as that with the US. And the "success" of the South Korea-US FTA has raised hope in Brussels. Peter Mandelson, EU Trade Commissioner, said: "This success strengthens the prospects for the planned EU-South Korea free trade agreement talks next month."

China is also said to be moving fast towards negotiating a bilateral agreement with Seoul. Its bilateral trade at US$118 billion in 2006 is 1.5 times that of South Korea’s trade with the US. Chinese Premier Wen Jiabao expressed the hope that an FTA between Beijing and Seoul can be conducted "as soon as possible".

There are other bilateral and regional free trade agreements being negotiated or in the planning stages. To date the WTO has been notified of nearly 300 bilateral and regional free trade agreements.

Asean as a group and many Asean individual members are pursuing trade and economic frameworks and agreements with non-Asean countries. At the regional level, Asean has signed framework agreements towards establishing FTAs with Japan and India, and the US is pursuing an "Asean initiative" with bilateral agreements with Asean countries.

At the bilateral level, Singapore has signed FTAs with New Zealand, Japan, Australia, US, European Free Trade Association and Jordan. Seoul is also in preliminary discussions with Australia, Canada and New Zealand. Malaysia, a "latecomer" among regional players into the FTA arena, now has at least a dozen such agreements in the pipeline, including one with the US.

By and large, the poor developing countries are left out of these arrangements as the bilateral agreements, such as that between the US and South Korea, are negotiated between more developed nations and large traders.

With the 60th anniversary this month of the General Agreement on Tariffs and Trade (Gatt), the predecessor of WTO, there is a "sense of crisis" prevailing on the lack of progress on the multilateral trade negotiations front. The Doha Development Round, which promised greater trade flows and development gains, has missed another deadline. And the poor developing countries have largely been left in the waiting room with nowhere to go and no one to turn to.

The developed countries continue to focus on their own development needs, cater to their own constituencies and political agendas. As Martin Wolf, writing in the Financial Times, says, "big powers will compete with one another to wrest more favourable terms for their own producers. The emergence of such power-driven trading blocs is a world away from the hopes of the founding fathers of the Gatt system".

And it is further away from the promises made to developing countries just six years ago in 2001. - NST

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