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The trade relationship with the United States, Korea's biggest trade partner, has an enormous influence on Korean economy. Due to the great effects that the United States has on Korean economy, the Koreans also have high interests and expectations on the Korea-U.S. free trade agreement (FTA) negotiations. As President Rho says, the purpose of the Korea-U.S. FTA negotiations is to advance Korean economy through opening up the border to trade and competition.
 Ēš Survival Strategy for the 21st Century
Nations of the 21st century endeavor to maximize national benefits through mutually strategic and cooperative relationships. Half of the world's trade occurs under the FTA, which is expected to grow even more substantial.
Other countries are striving to occupy the high ground in the world trade through the FTA. While foreign trade takes up about 70% of the GDP in South Korea, it can fall behind in competition against other countries if it does not actively participate in the trend of free trade.
The FTA aims for economic gains between countries and between the regions. However, the Korea-U.S. FTA has both economic and political significance, which result from the expansion of the trade between the two countries. Korea can achieve economic benefits, such as an increase in exports and foreign investments, and political gains include an increase in national security and foreign confidence with the United States through the FTA.
 Ēš Economic Benefits
The Korea-U.S. FTA is expected to help increase Korea's industrial competitiveness, as well its exports and foreign investments. It is seen as a way to increase the competitiveness of Korea's service industries, to create a prospective industry for the future, and means to strengthen the base of the domestic market.
If the Korea-U.S. FTA is concluded successfully, Korea hopes to increase its national income, public welfare, trade, production, and employment, thereby taking a huge step toward advancing Korea's economy. In the long-term, it is anticipated that the national income will increase by over 13 trillion, Korean experts will increase by 7.2 billion, and employment will increase by 104,000 employees.
The reason the Korea-U.S. FTA is such a pressing issue is because the market share of Korean products in the United States is falling behind that of China and India. The market share has dropped from 4.8% in 1988 to 2.6% last year. Also, while the rate of export increase of China and India to the U.S. increased to over 20%, that of Korea decreased to 5%.
Kim Seong-jim, the Assistant Secretary of the Ministry of Finance and Economy, emphasized that "Korea might lose its place in the United States if Korea does not occupy the American market prior to China and India."
In cooperation with technologies and investments of American industries, Korea can break free from their dependence upon Japan. Korea can benefit from calling upon American industries for business know-how in regards to research, investment, manufacture, service, as well as high-tech production.
If Korea signs the FTA with the United States (which takes up one third of the gross global product), the quantitative expansion of Korean economy is reckoned to contribute to a qualitative improvement of the national competitiveness. Korea has a very low productivity in the service industries. It must increase the productivity in the service industries to leap forward to a more advanced economy. To do so, Korea needs a major breakthrough in the quality of its service industries. The FTA with the United States can solve such problems in Korea.
In 1996, the Korean distribution industry grew rapidly as a result of the development of its market. In the light of its success, the Korean service industry is expected to become much more competitive as a result of the Korea-U.S. FTA.
Assistant Secretary Kim said, "If the Korea-U.S. FTA is concluded, Korea will level with the United States in industrial competitiveness, especially in the service industries, in the process of taking after the American systems."
 Ēš Political Impact
By forming a new economic alliance between the two countries, the Korea-U.S. FTA can potentially create a vigorous and comprehensive relationship for the future that extends beyond the existing Korea-U.S. political alliance centered on national security.
Furthermore, if the Korea-U.S. FTA can reduce Korea's national security risk, Korea can take an advantageous high ground in the Northeast Asian regional relationships. In particular, Korea's increase in foreign confidence will be able to help Korea's strategy in the Northeast Asia economic bloc succeed.
Seemingly, the United States will secure the market approach to Korean major industries through the Korea-U.S. FTA and restrain China's political and economic influences from intensifying in the Northeast Asia region. The United States will also be able to push forward to achieve political influence and receive economic benefits in the Northeast Asia region.
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Purpose
