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KREI Releases Research Results on "Two Years After Implementing Korea-Chile FTA."
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| Writer | Admin |
| Date | 2006.03.29 |
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□ The Chilean agricultural import has increased and the Chilean agricultural products＇ market share in Korea is growing ever since the signing of the FTA. The impact of the Korea-Chile FTA is growing severe. ○ Under the Korea-Chile FTA, the Korean grape, kiwifruit, pork, and wine markets were open to Chilean products . The import value of the four items from Chile amounted to 120 million dollars, accounting for over 95 percent of the entire imported agricultural/livestock products. ○ In 2005, the second year from the implementation of the Korea-Chile FTA, the Chilean agricultural/livestock product import has surged compared with 2004. The entire agricultural product import dropped 0.6 percent, but Korea＇s import from Chile increased as much as 67 percent. The livestock product import growth from Chile marked 47 percent, which is higher than the nationwide livestock import growth or 35 percent. ○ Therefore, the Chilean agricultural products came to take up 0.6 percent of the Korean import agricultural market, which is three times higher than 0.2 percent in 2001. The market share of Chilean livestock products grew to 3.4 percent in 2005 from 0 percent in 2001. ○ In 2005, the grape import growth from Chile marked 46 percent year-on-year, which is 2.5 times higher than growth rate of other countries. In particular, the grape import from Chile went up 92 percent in Jan to Feb. The impact of the Korea-Chile FTA will become more severe in the 3rd year from the implementation. ○ From January to April when tariff reduction was applied, the import of fresh grapes grew from 9.34 million dollars in 2004 to 15.76 million dollars in 2005. Likewise, the difference between them is 6.42 million dollars. Even after the consideration of the natural growth of Korea＇s grape demand, the grape import from Chile grew some 4.8 million dollars (4.8 billion won). □ However, farm households are unlikely to have great impact. ○ Despite the growth in Chilean agricultural product import, it will not have great impact on farm households thanks to the effort of farming restructuring by the government and farmers. ○ For example, the heated greenhouse-cultivated grapes did not see any price drop despite the Chilean grape import growth. It is because the farm households continue to keep the heating-based greenhouses after the FTA with Chile, and they have reduced their market supply until April when the tariff drop for Chilean grapes is applied, but will increase their market supply after May. ○ In addition, the government＇s grant for greenhouse closing is one of the reasons of reduced grape supply in winter time. The government＇s grant to grape farm households who decided to close their greenhouses surpassed 20 billion won from 2004 to 2005. □ The smooth implementation of the Korea-Chile FTA is the result of good external negotiations and restructuring. ○ The smooth implementation of the FTA with Chile was achieved by the government＇s successful negotiations. For example, the government excluded apple and pear, which are the two most concerning commodities, from the market opening to Chile. Another success point is that there was the farm household＇s restructuring effort to close greenhouses or adjust the market supply timing. ○ Therefore, in other FTA negotiations with other countries, successful negotiations will be needed to exclude sensitive agricultural products from market opening, and support for smooth restructuring shall follow. |
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