Research Reports
Establishment of Northeast Asian Economic Cooperation and Strategies for Korean Agriculture
-
AuthorEor, Myongkeun
-
Publication Date2005.12.01
-
Original
Korea, Japan and China have all made a commitment to further regional trade agreement(RTA). Northeast Asian Economic Cooperation or China-Japan-Korea FTA(CJKFTA), however, may result deadlock, mainly due to disagreements over agricultural issues. As well as the pursuit of free trade within the area, therefore, new approach to minimize the damage of agricultural sectors is required. With this purpose, this study explains difficulties of the RTA among those three countries and measures impacts of it on Korean agriculture. Thereafter, we are to propose some strategies for Korean agricultural sector such as agricultural cooperation within the region, external policies for negotiations, and other domestic agricultural policy measures.
There are some obstacles to be solved in advance for successful Northeast Asian Economic Cooperation. First, there exists large gap in economic scales and income levels between the three countries. Second, balance of mutual advantage in agricultural trade will be difficult to realize under the current regional trade agreement patterns. China has rapidly increased its agricultural exports at the expense of domestic producers in Korea and Japan, while balances of agricultural trade of both Korea and Japan are supposed to have huge deficits. Historical conflicts among those three countries also hider the regional integration.
The share of agricultural exports within the region has decreased while that of imports has increased. The effects of the economic integration on Korean agriculture seems to be negative. If tariffs are totally removed by the economic integration, agricultural imports from China will increase further.
The ‘Contribution to the Trade Balance (CTB)' index of the three countries indicates that China can specialize most of agricultural commodities and Korean specializes some agricultural processed products, but Japan has nothing specialized for agricultural exports. Accordingly, China might have monopoly power to control regional market for agricultural commodities, while Korea and Japan may suffer serious loss of farm income and furthermore possibly collapse agricultural production infrastructure.
We'd like to propose some possible strategies to minimize the loss of Korean agriculture and maximize mutual benefit from the regional integration. First, agricultural cooperation among China, Japan and Korea is necessary for long-lasting regional agriculture. In order to motivate regional cooperation, an independent agricultural agreement, so called, "Northeast Asian Agricultural Agreement" should be established. Agricultural cooperation may include cooperations for sanitary and phytosanitary(SPS) procedures, environmental issues, mutual consultations on agricultural policies, transfer of experiences for rural development, and constructing regional food system for food security.
Second, we need to prepare external policies for negotiation strategies to preoccupy a privilege position in Northeast Asian Economic Cooperation. Korea should consider the FTAs with Russia or with Taiwan since they are in complementary relationships with Korean agriculture. Also, promote the Korea-Japan FTA before CJKFTA to make example of special treatment for agriculture. In oder to minimize the damage of agriculture sector, sensitive agricultural commodities should be determined and ranked. The results from measurements of producer's surplus by commodities indicate that rice is the first sensitive followed by commodities such as beef, red pepper, ginseng, pork, garlic, apple, and so on.
Third, agricultural policies for structural adjustment should be arranged to improve productivity and competitiveness. Expansion of farm size through the exit of marginal farmers is essential to improve productivity and competitiveness. For effective farm income stabilization, various direct payments by commodity or by policy should be consolidated for a whole farm unit. Systematic and comprehensive policies for compensating income loss is required. Finally, all policies for agricultural structure transformation and farm income compensation should conform the principles of market economy in the process of strengthening competitiveness of Korean farmers.
Researchers: Myong-Keun Eor, Hye-Jung Kang, Joo-Nyung Heo, Chung-Gil Chung
E-mail address: myongeor@krei.re.kr
- Next
- The Decentralization Process of Rural Policy in England
- Prev
- Prospect of Changes in the Farmland Utilization Pattern after Rice Market Opening Negotiations and Countermeasures