South Korea is not fully prepared to enter free trade area (FTA) talks with China despite such a deal being widely believed to be positive for both economies, Shin Bong-kil, a minister with the Embassy of South Korea in China, said yesterday.

 

"Agriculture is the most sensitive sector and our biggest concern, and the talks cannot start until more than one year passes, when a feasibility study is expected," he said.

 

Zhu Hong, deputy director with the department of international trade and economic affairs with the Ministry of Commerce, agreed with Shin on the significance of reaching consensus on opening the agricultural sector in promoting the progress of the FTA talks, but said it is hard to know when that will happen.

 

Furthermore, the progress of the talks are likely to be impacted by the ongoing, though stalled, US-South Korea FTA talks because of protests from South Korean farmers, Zhu said.

 

On November 17, officials from China and South Korea said a feasibility study among governments, industries, and academies of both sides would be launched as early as 2007. That comes on the heels of a two-year preliminary study started in November 2004.

 

"There are basic results (from the preliminary study), such as the FTA would serve to promote bi-lateral trade and enlarge the gross domestic product of both economies. But this is only the positive side," said Shin.

 

The negative side, he said, is the gap in agricultural sector competitiveness between China and South Korea.

 

In South Korea, the agricultural sector has been protected due to high-tariffs set on imported products. Agricultural products in South Korea are priced 3 to 12 times higher than products from China.

 

"If we lower tariffs on agricultural sector imports, disaster would strike our agricultural sector, as it would have no competitiveness at all," Shin said.

 

The recently held fifth-round US-South Korea FTA talks in late November reached a deadlock because local farmers were strongly against it.

 

"Imported agricultural products from the US sell at one-third the price of those from South Korea, let alone imported goods from China, so it's difficult to open the sector," said Lu Jianren, a senior researcher at the Chinese Academy of Social Science Institute of Asia-Pacific Studies.

 

Shin said that "if the US-South Korea FTA talks cannot be brought onto a normal track, we will have to wait for an even longer time to have China-South Korea talks."

 

"I am not optimistic about the talks," said Lu. "Even if started, it will be hard to" come to an agreement.

 

Besides agriculture, textiles and manufacturing are also stumbling blocks in terms of talks with South Korea, Lu said.

 

China has signed FTA agreements with the Association of Southeast Asian Nations (ASEAN), Chile, and Pakistan, and is engaged in FTA talks with other nations. South Korea is also promoting the FTA talks with Canada and ASEAN, among others.

 

But "a China-South Korea FTA would be of more significance than the existing China-related FTAs," Zhu said.

 

In 2005, bi-lateral trade between the countries was US$111.9 billion, increasing by 24.3 percent year-on-year and 20 times that of 1992. This year, the figure is expected to rise to US$130 billion.

 

(China Daily December 13, 2006)