GAINS AND LOSSES FROM FTA AGREEMENT

[Anchor Lead]

Yesterday was the 10th anniversary of the enactment of the KORUS free trade agreement. Korea reaped much benefit from the trade deal, such as nearly doubling the trade surplus. However, there are many issues in other sectors, like an increased import of American beef causing the decline of small Korean beef producers. Here’s a look at Korea’s gains and losses from the FTA.

[Pkg]

This factory manufactures pistons for automotive engines. About 20% of the total output is exported to the US. Their export has increased more than eight fold since the signing of the KORUS FTA and subsequent removal of the import duty.

[Soundbite] Yang Jun-gyu(CEO, Automotive Parts Manufacturer) : "Tariffs are set at only a few percent, but even that can be very taxing. We benefited from the tariff removal and close relations between the two countries."

Korea’s automotive parts industry is one of the sectors that benefited from the FTA. Car exports to the U.S. grew at an average of 7% annually after a 2.5% tariff on automobiles and parts was removed. As a result, automobiles and automotive components account for 25% of Korea’s export to the U.S. More noticeably, the export of electric vehicles has nearly tripled every year, spurred on by America's environment-friendly policies. Secondary batteries and synthetic resin exporters also saw their annual growth rates average between 15 to 20%. On the other hand, the import of American crude oil and gas increased dramatically from almost zero. The import of American beef, which Korean farmers had protested strongly against, recorded an average increase of about 13% per year. In the process, the number of small cattle farmers fell more than 40% over the past ten years.

[Soundbite] Lee Jeong-hun(Council for Livestock Related Groups) : "The livestock self-sufficiency rate halved and the number of livestock farmers plummeted. They urgently need assistance ahead of the 2026 zero-tariff plan and soaring fodder costs."

However, some experts say the livestock industry has been reshaped as the number of large cattle farmers that raise more than 50 cows has actually risen.