Leadership Trends in Business Research
Some accuse the Korean government for promoting FTAs in such a way that the number of FTAs, rather than their contents, is the primary focus. Choi (2007) argues that the conclusion of an FTA should not be its own goal because an FTA is merely a tool for increasing competitiveness and efficiency, and because Korea's main FTA policies focus on outward expansion, the effects of trade liberalization are less than envisaged. In Korea, FTAs have been used as a policy instrument to achieve an advanced economy. Currently, the Korean economy faces weak development potential inside and increased globalization abroad. Under these conditions, the current economic-growth paradigm of increasing inputs cannot provide long-term growth. It is impossible to enter the circle of developed countries without first boosting firms' creative competencies. The provisions of agreements signed prior to the Korea-US FTA are insufficient to promote industrial competitiveness. As a result, they are not projected to have any impact on economic development other than increasing the country's export revenues. The Korea-US Free Trade Agreement is seen as having incorporated numerous policy measures that promote competitiveness, such as deregulation and economic system development.
Findings from Existing Large Scale Surveys. Whether the nations with whom
the Korean government has signed an FTA are those that Korean businesses choose can have a significant impact on the use of existing FTAs and its economic consequences. As a result, the FTA nations preferred by Korean firms in 2006 were compared in this study to the countries with which Korea has already completed FTAs. Table 4 summarizes the findings of Cheong (2006). FTAs promote economic growth by accelerating the acquisition of material, human, and knowledge capital. When tariff and non-tariff barriers are removed, resources are shifted from industries with weak competitive power to those with strong competitive power, increasing the country's overall resource allocation efficiency. It is difficult, however, to analyze the nations with which Korea has signed an FTA by industry because many firms, even within the same industry, have varied attitudes about FTAs. Despite this difficulties, it is preferable to choose the nations with which to sign an FTA while taking into account the FTA partner countries selected by the major industries. With the cooperation of the Federation of Korean Industries, the authors conducted a poll of Korean firms in 2006 to determine their preferred countries with which to establish FTAs. The findings were presented at the 2006 conference "The Promotion of FTAs and the Gain and Loss by Industry," which took place at the Federation of Korean Industries in Seoul. The analysis focused on the automobile, steel, power and electronics, petrochemicals, and textile industries. According to the findings of the preceding analysis, Korean companies favor FTAs with major economic blocs such as the PRC, the United States, and the European Union. This demonstrates that, while the Korean government has promoted FTAs with small-scale economies such as Chile, Singapore, and EFTA, Korean firms believe that promoting FTAs with major economic powers is more important than pushing FTAs with minor regions. In 2006,
Korean business groups viewed the conclusion of an FTA with the PRC to be the most urgent
In particular, the energy, electronics, and petrochemicals industries placed the PRC first among Korean firms' desired FTA partner nations, with the steel industry ranking it second behind ASEAN. The automobile and general-machinery industries, on the other hand, see an FTA with the PRC as less appealing than FTAs with the EU and the United States. The Korean textile sector, which is less price competitive than the PRC, believes that promoting an FTA with the United States is urgently needed. According to the survey results, Korean firms favor the nations with whom Korea had an FTA before to the Korea-US FTA. The Korean government initiated FTA negotiations with the United States in early 2006 and official FTA negotiations with the EU in mid-2007. This demonstrates that the Korean government's FTA policies are consistent with the interests of Korean businesses. The following sections evaluate Korean firms' perspectives toward the nations with whom the Korean government is promoting or considering an FTA. As of October 2008, the Korean government was negotiating free trade agreements with Canada, India, Mexico, the EU, and the Gulf Cooperation Council (GCC). The majority of the terms of the FTA with India were agreed upon during the September negotiations, but certain contentious issues remain to be settled before it is officially signed. According to KOTRA (2008) survey results, Korean firms want the government to vigorously pursue FTAs,
although they disagree on their ideal FTA partner countries.19 As for the reasons
(based on the most preferred country) for the conclusion of FTAs with the countries with which Korean enterprises want FTA negotiations to be resumed or initiated, respondents cited reasons that are directly related to them, such as "high frequency and big volume of trade" and "it (the FTA partner country) is a major export-import country." They also mentioned grounds for future marketability and profitability, such as "expected improvement of its (the FTA partner country's) export performance" and "the scale and potentials of the country's economy and market" (see Table 5). Concerning the firms' expectation that FTA negotiations with Japan be reopened, the majority of the enterprises said "it is advantageous for importing raw materials/materials/parts" and "because Japan is a major trading country." Regarding the firms' hope that Korea-PRC FTA negotiations be initiated, the majority of the enterprises mentioned that "PRC is a major trading country" and that "both the trade volume and frequency of the country are big." Table 6 shows that the "economic growth potential and high marketability" of Russia and India were regarded important factors in finalizing FTAs.
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