Research Reports
Analyses of the Chinese Horticultural Industry Against the Korea-China FTA
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AuthorJeon, Hyoungjin
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Publication Date2013.12.30
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Original
Background of Study
China's horticulture industry accounts for a big portion of the agriculture product trade between Korea and China, and has great impact on Korea's domestic agriculture industry. Thus it is important to comprehensively and systematically identify the trend and status of China's horticulture industry in preparation for the FTA between Korea and China.
Methods of Study
In this study, various methods including literature research, statistics analysis, visiting relevant institutes and sites, consigned research, and surveys are utilized to accomplish the purpose of this study.
Results and Implications of Study
This study is to comprehensively identify the current status of China's horticulture industry, which accounts for a big portion of the agriculture product trading between Korea and China and has great impact on Korea's domestic agriculture industry, and to present countermeasures for domestic horticulture industry based on the foregoing findings. The major countermeasures in 3 aspects as a result of this study are described as follows.
First, it is urgent that Korea's domestic horticulture industry needs to improve its competitiveness by reducing production costs and production integration under the circumstances that the competition is intensifying between Korea and China. In the Chinese horticulture industry, the labor productivity has been the growth driver and it is turning into high production cost structure having high dependency on intermediate inputs. Our industry needs to consider price competitiveness by reducing production costs for major vegetables and fruits.
China is promoting production integration as a measure for overcoming the limitation of the small farm structure and increasing income for agricultural households. We also need regulatory policy to enhance integration between agrifood companies and agriculture producers in response to enhanced competitiveness of the Chinese horticulture industry by production integration.
Second, it is urgent that we need to establish a monitoring system on China's horticulture products since the relevant trading between Korea and China has continuously expanded and Korea became more and more dependent on China's Kimchi and its seasoning vegetables. Along with the foregoing, we need to establish and operate a forecast model for China's agriculture industry in order to estimate how the changes in the supply and demand of China's horticulture products affect our agriculture industry, and to apply the outcome in establishing regulatory policies.
It is essential for us to rely on the import of China's products for balancing the supply and demand of major domestic horticulture products. Under the circumstances, we need to continuously reinforce food safety tests at sites in China. Thus it is necessary to consider a prior registration system of export companies (manufacturers) and a history tracking system for import companies to enhance prior management on the manufacturing facilities at site. In addition, it is also important that we need to establish a permanent food safety cooperation system with the Chinese government by amending the “Agreement on Food Safety Cooperation” made between Korea and China in 2003.
The FTA between Korea and China, in which the first stage of negotiation was concluded and now is in the process of second negotiation, can be defined as the ‘farm product FTA’ from the perspective of trading structure for agriculture products. It is necessary to review mid/long-term investment or finance plans for development of domestic farm agriculture together with measures for damage preservation since the vegetable industry is expected to get damages the most when the FTA between Korea and China is concluded. We need to prepare measures to expand the export of domestic horticulture products to the China market in order to take advantage of opportunities from the FTA. In order to accomplish the foregoing, we need to strengthen the constitution for domestic agriculture products, establish better infrastructure, diversifying strategies for each product items, and establish a strategy for market segmentation, and a strategy focusing on expansion of distribution infrastructure in China.
Third, both countries have agreed that they reassure the rights and responsibilities under the WTO/SPS treaty in the first stage of negotiation of FTA between Korea and China. If China raises an issue regarding the regionalization in the second stage, we also need to bring up the case where we have acknowledged the concept of regionalization. However, acknowledging the concept or principle of regionalization does not constitute automatic application and import based on the concept.
From the long-term perspective, we need to enhance monitoring on the clean areas in China in preparation of the circumstances when the regionalization principle is applied on the agriculture product trading between Korea and China while it is important to establish international standards regarding the acknowledgement of regionalization, scientific grounds, and risk evaluation and assessment methods. Also we need to reorganize the domestic quarantine system towards enhancing sanitary conditions for importing.
Researchers: Hyoung-Jin Jeon, Myong-Keun Eor, Sung-Woo Kim, Jae-Hwan Han
Research Period: 2013. 1 ~ 2013. 12
E-mail Address: hjchon@krei.re.kr
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