Korea-China FTA
The National Assembly on Nov. 30 ratified the long-delayed FTA with China. Of the 265 attending lawmakers, 196 members voted in approval of the Korea-China FTA, while 33 disapproved and 36 abstained in a plenary session vote. Accordingly, the ratification has completed in six months after President Park Geun-hye officially signed the FTA with Chinese President Xi Jinping on June 1.
Before approving the Korea-China FTA, the ruling-opposition parties and government council, a trilateral consultative body in the National Assembly had agreed to provide financial support of more than 3 trillion won (US$2.59 billion) to agriculture and fishery businesses.
Meanwhile, their decision to raise 1 trillion won (US$863.56 million) of coexistent cooperation and support funds has stirred up controversy as the industry raised a strong opposition against the trade profit sharing scheme, which was the biggest issue in the ratification, citing it as a quasi-tax. It means they have actually decided to implement a variant of trade profit sharing scheme with a “voluntary” collection method. Therefore, the ruling and opposition parties cannot escape from the criticism that they have made the unprecedented practice to win 3.12 million votes of farmers and fishermen before the general election next year.
Cho Dong-geun, an economics professor at Myongji University, said, “It is highly likely to become a practice in the future. I am wondering how much more funds they will provide when ratifying the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), which are in the works. In short, they are the incompetent ruling party and the cunning opposition party. The 19th National Assembly will stand tall in a history of populism.”
The trilateral consultative body also confirmed “Korea-China FTA Additional Complementary Measures” on Nov. 30 to compensate sectors expected to take a hit from the FTA. They vowed to build funds of 1 trillion won (US$863.56 million) over the next 10 years to provide financial assistance to agriculture and fishery businesses. They also agreed to inject 1.6 trillion won (US$1.38 billion) to increase the amount of direct subsidies to the affected industries and lower the interest rate of policy funds. Therefore, a total of 3.08 trillion won (US$2.66 billion) of funds, including 478.3 billion won (US$413.04 million) of the damage compensation measures announced by the government in June, will be used to support agriculture and fishery sector.
However, a government official said, “A trade profit sharing scheme is unparalleled in any other country in the world and it is technically and juridically impossible to introduce the scheme. So, we have come up with the measures to voluntarily raise funds.”