FTA Woes
The Korean government has claimed that tariff eliminations and cuts would lower the prices of import products, scaling up benefits to consumers whenever the government inked FTAs with major countries. But it is generally said that the effects of such FTAs do not live up to people’s expectations.
On the contrary, the prices of not a few products rose in countries that implemented similar trade deals. Consumers Korea conducted a survey of the prices of 42 products in the major cities of 13 countries including New York, Tokyo, London, Berlin, Beijing, Seoul, and Paris in June and Oct. According to the results of the survey, 35 out of 42 products in Seoul were found to be generally expensive, placing 5th or higher.
The consumer group surveyed the real retail prices of products at department stores, large discount stores, and general supermarkets in such cities and compared one another. Seoul ranked tenth among them, but prices in the city were at the top level. In particular, high rankers included items which prices will drop due to the effects of the FTA, according to the Korean government.
In fact, 100g of cherries imported from the U.S. went for 1,250 won in June 2012 prior to the implementation of the Korea-US FTA. But they were priced at 1,940 won in June 2013. In June of last year, their price stood at 1,780 won. In the U.S., their prices have been marked down since 2012.
Taking the foreign exchange rate into account, in June of last year, the first price of 1kg of American cherries dropped 19 percent to 2,150 won from June 2012. But instead, their consumer price rose 42.4 percent to 5,300 won in Korea. The start of the Korea-U.S. FTA scratched off a 24 percent tariff on cherries. But it was importers which enjoyed the benefits of the elimination of the tariff. Consumers did not. A similar situation went for imported grapes.
Also, Red Globe grapes imported from the United States and Chile and sold in batches of 800 g, and 800 g American Crimson Seedless grapes went for 7,484 won and 8,108 won, respectively, in the Korean market. In terms of the prices of both, Korea came in second among 13 nations. Besides, the prices of nine fruits such as American grapefruits, lemons, and oranges in Seoul ranked within the top five among 13 cities.
The Chilean wine Montes Alpha Cabernet Sauvignon was the most expensive in Korea at 43,000 won among all 13 countries surveyed, even though Korea signed its first FTA agreement with Chile in 2004. Although an increase in import volume and the effects of the FTA lowered the price by 4,000 won, the wine is still pricey in Korea.