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John Ravenhill Australian National University Presented to
conference on New Zealand, Korea and Asia-Pacific: From Distance to
Closeness, Auckland 16- 17 November 2012
Free Trade Agreements in the Asia-Pacific: Why Korea Might be
Different
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Bilateral Minilateral Chile (0.88%, 2003, 2004)) European Free
Trade Association (0.64%, 2005,
2006) Singapore (3.51%, 2005, 2006) ASEAN (10.93%, 2005-2009)
United States (9.81%, 2007, 2011) Gulf Cooperation Council (9.60%,
negotiations
since 2008) EU (11.06%, 2010, 2011) Mercosur (1.40%, under
study) Peru (0.20%, 2010, 2011) Japan and China (35.66%, under
study) India (1.50%, 2009, 2010) China (24.85%, negotiations since
2012) Japan (10.81%, negotiations since 2003) Australia (2.61%,
negotiations since 2009) Canada (1.13%, negotiations since 2005)
Mexico (1.14%, negotiations since 2006) Turkey (0.47%, negotiations
since 2010) New Zealand (0.23%, negotiations since 2009) Colombia
(0.17%, negotiations since 2009) Russia (2.28%, under study)
Vietnam (0.96%, under study)
South Africa (0.47%, under study)
Israel (0.22%, under study)
Korea’s PTAs (share in total exports, start of negotiations
date, implementation date)
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Understanding the Proliferation of PTAs
• Conventional Wisdom: Driven by Firms Seeking Advantage or to
Level the Playing Field
• Two problems: (1) States reduced to role of agents, no
autonomy to pursue own vision of what is good for economy. (2) PTAs
were driven as much by political/strategic concerns as economic
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The Consequences of Politically-Driven PTAs • Superficial
Agreements
– Particularly true of China, ASEAN – China-ASEAN Agreement on
Trade in Goods
only 23 articles • Not just carve-outs but protracted periods
for
implementation • Few WTO Plus provisions in Asian
agreements • Often signed with inconsequential partners
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Early Korean Experience • State driven response to Financial
Crisis • Chose Chile because relatively unimportant
partner, agriculture different season • Business consulted after
the fact. Little support to
government publicly because feared backlash • Despite carve-outs
(only 25% of tariffs on
agriculture immediately eliminated), Huge domestic resistance
with Chile treaty rejected 3 times
• Still some shallow agreements (India)
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Invitation to US • Security Linkage: Sold domestically and
internationally
as response to rise of China • China Economic Challenge >>
Interest in Improving
Access to Large Markets. Also out-manoeuvre Japan • Domestic
Economic Restructuring:
Desire to change economic structure away from developmental
state. Ambivalence towards chaebol on left side of politics.
• Once KORUS under negotiation, desire to diversify >>
positive response to EU’s Global Europe Strategy of 2006. Again
Seoul takes initiative
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Why Politically Possible?
• Reorganization of Korea’s Trade Policy Bureaucracy – Ministry
of Foreign Affairs and Trade created
1998. – Creation of Office of the Minister for Trade in
1998, unifying trade negotiation authority in one office.
– Strengthened after 2004. • Introduction of Generous
Compensation
Scheme
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WTO Plus Elements in KOR-EU and KORUS
Source: Ahn (2010)
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Agricultural Market Liberalization in KOR-EU and KORUS
Source: Ahn (2010)
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Consequences
• Domino Effect: Tokyo particularly worried >> requests to
EU, interest in TPP
• Quality Effects: Serious Agreements
• Balancing Effects: Agreement to begin negotiations for a
Trilateral NE Asian PTA
• But Korea no interest in TPP
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Implications for Australia and New Zealand • NZ first country
with which Korea
undertook study for FTA in 1999; • negotiations with NZ &
Aus since 2009;
essentially on hold since mid-2010 • Domestic Political
Constraints • Nothing Much to Gain
– Aus car market? – Minerals Chapter?
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Free Trade Agreements in the Asia-Pacific: Why Korea Might be
DifferentSlide Number 2Understanding the Proliferation of PTAsThe
Consequences of Politically-Driven PTAsEarly Korean
ExperienceInvitation to USWhy Politically Possible?Slide Number
8Slide Number 9Slide Number 10ConsequencesImplications for
Australia and New ZealandSlide Number 13
