[Pleasant FTA] Opening It Ourselves Serves the National Interest

There is intense debate over the Korea-U.S. FTA negotiations concluded on April 2, 2007. Supporters say we did fairly well, while opponents criticize the deal for giving away too much. However fierce the dispute may be, there is one thing both sides have in common: the belief that it is best to minimize the extent of our own market opening while extracting as much opening as possible from the other country.

But that is mistaken. When inexpensive, high-quality foreign products come in, our industries are restructured toward higher productivity. That is why opening up on our own is in our national interest. Greater mutual openness benefits everyone.

No country has ever become prosperous by keeping its doors closed. Although most of continental Europe was in the Dark Ages during the medieval period, the Italian city-states were able to prosper because they made free trade a means of survival. According to data from Columbia University’s Earth Institute, among developing countries in the 1970s and 1980s, those that chose openness enjoyed average annual economic growth of 4.5%, while those that chose closure recorded growth of only 0.7%.

Even so, openness is not easy because those who suffer from it raise their voices in opposition. It is true that businesses that had long operated comfortably under government protection face difficulties when cheaper, better competing products come in from abroad. But a protected situation should not be regarded as normal. Receiving government protection is no different from forcing consumers, in the name of patriotism, to buy expensive domestic products. Rather than demanding patriotism from consumers, the right course is to practice patriotism ourselves by making products that are cheaper and better than foreign ones.

Above all, we have the ability to overcome such difficulties. In 1990, people said, “If the Uruguay Round negotiations proceed like this, our agriculture will be completely dismantled,” yet 17 years later our agriculture remains intact. When the distribution industry was opened in 1991, there was alarmist talk that “if U.S. and Japanese electronics companies open direct sales outlets in Korea and sell their products, the domestic electronics industry will collapse within two or three years.” But the result was the exact opposite. Our electronics industry instead became world-class, and the competitiveness of our discount retailers such as E-Mart and Lotte Mart increased to the point that America’s Walmart and France’s Carrefour ended up withdrawing their stores. This is a clear example showing that when we are confronted with competition, we in fact become stronger.

Original title: [유쾌한 FTA ] 스스로 여는 것이 국익이다

Author: Center for Free Enterprise (CFE)

Date: 2007-06-20

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=20&idx=10691