This study is to look in and analyze the impacts of the KORUS FTA on the labor sector in Korea from the comprehensive and wholistic perspective
The KORUS FTA is expected to elevate productivity with growing net exports and FDI, create employment i ...
This study is to look in and analyze the impacts of the KORUS FTA on the labor sector in Korea from the comprehensive and wholistic perspective
The KORUS FTA is expected to elevate productivity with growing net exports and FDI, create employment in all industrial sectors by 29,000 annually and increase real income by 0.16% annually. For the next 5-10years, the agreement is presumed to create employment by 104,000 in the manufacturing sector alone.
According to Delphi research, experts in Korea have shown reservation about the FTA's employment impact in Korea. Automobile and automobile parts are a few sectors that are likely to see fast growth in employment. Electricity, electronics, textile and clothing, machinery and chemical sectors will see general increase in employment. Agriculture, forestry, fisheries, stock breeding sectors are likely to experience fast fall in employment. Meanwhile, it was pointed out that the biggest hurdle in realizing the employment potential that the KORUS FTA promises is labor inflexibility.
In the agreement for intellectual property rights there are more requirements of US than those of ours. And there are also many controversial topics such as an introduction of legal compensation system for damage and an extension of copyright protection period for more than 70 years. Considering these agreements, it may seem to be absolutely disadvantageous to us, but on the other hand it can be either an opportunity or development of environment to strengthen the competitiveness for us. In addition, since there are some regulations which have room for discretion by an expression of negotiations, we could come up with a good strategy through the process of domestic legislation or application.
Examining the Labor part of KORUS FTA(Ch.19), the agreement has more powerful regulations and carries more highly binding force than the other labor arrangement between US and other countries. Furthermore, it can be considered positively to introduce a ‘Public Communication System’ which makes public can provide opinion and also makes a process for resolving disputes to be more rapid and transparent. From now on, we have to persist in effort to develop our domestic working conditions up to global standard. And at the same time, we need to strengthen the diplomacy in the labor sector to induce the international organizations such as ILO and OECD to much reflect our opinions.
The KORUS FTA would probably induce the inward flow of foreign direct investment. And that might probably, as in the case of Mexico, raise the relative wage of skilled-worker, and therefore aggravate the problem of wage inequality. Because the MNCs are the firms that are usually pursuing the skilled-intensive production activities based on the advanced technological knowledge. On the contrary, the effect of inward FDI on the general level of wage is more unclear. One would hardly expect the rise of real wage if, as in the case of Mexico, the productivity competition brought about by MNCs's market penetration leads to simple cost reduction such as lay-offs rather than to substantive technical progress. Moreover, the weak locational advantage of Korean economy might probably reduce the beneficial FDI-attracting effect of KORUS FTA. In fact, although its overall regulative degree relative to FDI doesn't seem to be higher than OECD average, the Korean economy has been performing quite poorly in attracting FDI relative to the East-Asian developping countries as well as to OECD advanced members.