The National Assembly committee on foreign affairs approved Korea’s free trade pacts with Australia and Canada on Thursday, following a bipartisan agreement to ratify the much-delayed motions by Dec. 2.
The treaties’ ratification has been stalled in the parliament amid concerns about their possible impact on livestock and dairy farms.
After weeks of negotiations, the governing Saenuri Party and the main opposition New Politics Alliance for Democracy announced that they would pass the deals at a plenary session next month. The announcement came after the rival parties reached an agreement with the government for promising farmers more state subsidies and low- interest loans.
The breakthrough comes as President Park Geun-hye is set to visit Australia Friday for a two-day G20 meeting.
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“The lawmakers’ promises to lower the interest rates on our loans have convinced us to support the FTAs, although we are going to go over the details,” said Lee Gang-heoun, a spokesman for the four dairy and livestock farmers’ associations that were opposed to the free trade pacts.
Farmers were not present at the talks, but had called for reductions in the interest on government farm loans as a condition for supporting the free trade agreements. Australian and Canadian farm products in Korea are expected to financially strain Korean farmers after the deals come into force, according to researchers at the Korea Institute for International Economic Policy.
The pacts are likely to come into force in December, initiating the first round of tariff cuts. The second round of cuts will begin days later on New Year’s Day.
The two successive cuts are expected to benefit Canadian and Australian beef exporters facing U.S. competitors in the Korean market. South Korean manufacturers contending with their Japanese counterparts in the Australian market are also expected to celebrate the decision for similar reasons. Japan is nearing ratification of a free trade deal of its own with Australia, which is expected to enter force early next year.
Exporters had worried that prolonged negotiations in the South Korean parliament would push the accords’ approvals to next year. Tariff cuts would have been delayed in such a scenario by as long as 11 months, with the first round of cuts beginning whenever the deal was passed, and the second round not coming into effect until Jan. 1, 2016.
The free trade pact with Australia, signed in April, is projected to increase South Korea’s gross domestic product by 0.14 percent in 10 years after ratification, according to the KIEP. The treaty with Canada, finalized in September, will expand the nation’s GDP by 0.04 percent during the same period, KIEP predicted.
Farmers appear to be resigned to the inevitability of more FTAs with larger economies that enjoy comparative advantages in farming.
“We know they’re coming, but we want some kind of minimum assistance from the government to help us continue our lives,” said Son Jeong-ryul, chairman of the Korea Dairy and Beef Farmers Association, earlier this month.
By Jeong Hunny (hj257@heraldcorp.com)
