AMCHAM chief says free trade will broaden alliance to economy
This is the fourth of a series of interviews with top officials and trade-related association chiefs on FTAs in light of the Korea-U.S. FTA taking effect. ― Ed.
The chairman of the American Chamber of Commerce in Korea hailed the Korea-U.S. Free Trade Agreement that went into effect this week as an opportunity to expand their alliance to the economy.
“It will also add a third economic pillar to the already strong political and military relationship (between the two countries),” AMCHAM chairman Pat Gaines told The Korea Herald this week.
He expected the trade pact to create new export opportunities and jobs in both countries through the elimination of tariffs and other trade barriers. Under the KORUS FTA, 95 percent of tariffs will be eliminated within five years, with most remaining tariffs to follow within 10 years.
The Korea Institute for International Economic Policy predicted in 2011 that the agreement would see Korea’s real GDP increase 5.7 percent as well as create 350,000 new jobs in Korea over 10 years.
The U.S. International Trade Commission estimated that the FTA would increase U.S. exports to Korea by $10 billion-11 billion annually and increase U.S. GDP by at least $10 billion.
“The KORUS FTA will help mature Korea’s services industry and spur greater productivity and innovation through competition and partnerships with foreign firms. Korean policymakers have emphasized that this will help address Korea’s increased economic polarization by creating new jobs in the service sector, among others,” said Gaines.
“SMEs of both nations are also expected to strongly benefit,” he added.
The U.S. chamber chief also said the FTA would spur new, win-win partnerships between Korean and U.S. firms.
Two examples Gaines listed were LG Chem, which supplies batteries for GM’s Chevrolet Volt, and Boeing which partners with Korea Aerospace Industries and Korean Air Aerospace Division. Gaines is also the president of Boeing Korea.
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Pat Gaines (Boeing Korea) |
“Improvement in the business environment will improve the Korean economy’s transparency, consistency and predictability, thus improving the business environment and giving both domestic and foreign firms greater security in planning their business strategies and pursuing new investments. This will induce more foreign direct investment into Korea including from the U.S.,” he said.
He emphasized that AMCHAM members are finding Korea an increasingly attractive place to invest and do business in and a growing number of foreign companies are entering, expanding, and thriving in the Korean market.
“Costco, for example, is doing very well in Korea. Its Yangjae store has the highest sales per square meter of any Costco in the world,” he said.
“Recent improvements in the protection of intellectual property rights, for example, are helping to bolster Korea’s reputation as a good destination for foreign investment,” he said. “This is natural, as Korean companies now have more and more IPR to protect in both home and overseas markets and this has led to a change in the attitude on the importance of IPR.”
But there are challenges ahead.
“One area where more work needs to be done relates to regulatory transparency,” he noted.
“Too often, new rules that affect companies’ ability to do business are enacted in Korea without sufficient notice to or involvement of stakeholders, including the foreign business community.
“It is essential that the government make greater efforts to ensure that new policies and changes to existing policies are developed and implemented in a way that allows all stakeholders, both domestic and foreign, a chance to provide meaningful input into the process,” he said.
Concerning opposition to the free trade pact among some Koreans, Gaines said the fact that Korea has an FTA with the U.S. before other U.S. allies such as Japan is very “meaningful and is a tribute to the strong friendship and alliance the United States and Korea have enjoyed for many, many decades.”
Since 2007, when the KORUS FTA was signed, AMCHAM has advocated for the early ratification of the agreement to U.S. and Korean leaders.
Over the past five years, AMCHAM delegations have visited Washington D.C. several times a year ― the so-called AMCHAM “Doorknocks” ― to meet with senior U.S. private and public sector leaders, including many members of Congress, to educate them about the importance of the free trade pact.
“We knew that this FTA would significantly benefit both countries,” he said.
“We were very pleased to see that our work, and the work of our many friends and allies in both countries, finally paid off,” he said. “Now, with the FTA taking effect on March 15, the governments and business communities of both countries are preparing for the exciting opportunities that this agreement will create.”
To make sure companies in both countries understand the benefits of the deal, AMCHAM with Korea’s Finance Ministry plans to hold the “KORUS FTA Utilization Seminar” on May 3.
“The seminar will help both Korean and U.S. companies, large and small, better understand the provisions in the FTA and how they can best utilize them. We are expecting a significant turnout, as attendees will be able to hear directly from the KORUS FTA negotiators.”
In addition, AMCHAM will host business and government delegations from more than 22 U.S. states this year who are interested in forming partnerships and doing business in Korea.
By Yoav Cerralbo (
yoav@heraldcorp.com)
