Korean Job Discussion Forums

[proverbs]

i have a general idea of what it is, but was wondering if someone could give some more details on it.

I've been seeing all the fighting and protests against it, so i was curious to know who it will affect, and how it will affect them?

[fortysixyou]

I've been wondering the same thing. What does the deal mean for Korea and America respectively?

I heard a friend speculate that it's going to destroy the Korean farming industry, as the deal will allow the tax-free import of superior, cheaper foods grown by farmers around the world. Korean farmers won't be able to compete. Perhaps if this happens, they'll have to rely on the peoples' nationalistic ethos: stay loyal to Korea, buy Korean.


I've also heard that it doesn't matter that the FTA deal has been ratified and passed, because next election the people will vote in the opposition party who will immediately overturn the deal.

[cj1976]

Some Koreans seem to fear that Korea will become too subservient to America and that the USA is just protecting its own interests. However, it also appears that certain industries will profit due to the cheaper imports. I went past City Hall on the bus yesterday and there were hundreds of policemen. I wonder if it was something to do with this?

[bekinseki]

There are always hundreds of cops downtown. Don't start getting worried until there are tens of thousands.

[eamo]

Not an expert but I think the Korean farmers will be able to compete.

There's a lot of food nationalism here in Korea so it would be quite easy to organize a 'buy Korean' campaign. Which I think would work if two other things happened.

1. The Korean farming industry streamlined a bit. There are way too many small farmers taking up land and producing small crops inefficiently. It sounds harsh, but most other developed countries have already moved from smaller farms to big farms to increase efficiency. Why would Korea be any different. Besides, most of these small farmers are old now and their children don't want to take on the farm. So they're disappearing anyway.

2. Most importantly, the food distribution system in Korea is re-structured and more strictly regulated. This system has evolved where produce is passed through 2, 3 or even more middle-men, each adding a fat margin, which can mean that watermelon bought for 500 won apiece from the farmer ends up being 15,000 won in the supermarket. True example, BTW.

Lots of supermarkets in the west are setting up supply deals straight from the farmers. No middle-men at all...........I've heard in Korea that this is seen as not fair play and not giving businessmen a chance to make a living.

[nathanrutledge]

Eamo, I couldn't disagree with you more.

First, Korean farms cannot be compared to American farms, which is the only yardstick that matters in this particular debate. I come from Nebraska, a state that is the same size as South Korea, with rolling hills that is supported entirely by farming. Driving a tractor or combine aroud from field to field is easy as we are entirely flat in the east, and rolling gentle hills in the west. Korea on the other hand has mountains. The few areas that are flat make up enough land for a few regular, American sized farms. Ergo, they cannot compete in effiency. They cannot get economies of scale. IF farmers were to have farms of equal size to the US, the number of farmers would be so low that collusion and cartels would easily form.

Long story short, they just don't have the land to allow for effecient farming on the scale that the US does.

Secondly, regulation is the LAST thing that they need here. They have price floors and ceilings on so many products here - rice that costs 10k a bag would be 1$ in the US. So much of the ineffeciency here IS the regulation and bureaucracy, not the lack of it.

The other cause of price fluctuations and swings is that Korea imports so much food. A typhoon hits and the food supply is disrupted, imported foods get pricier. At the same time, fields damaged in the typhoon cause local products to go up. You don't have these problems in Europe or the US because of the sheer size. A flood in France doesn't affect the grapes in Italy, while an outbreak of foot and mouth disease in Germany doesn't affect the pigs of France. Yes, prices can fluctuate there because of these things, but not on anywhere the same scale as Korea.

I DO agree with you about the middlemen. I'm an open market thing - thrive or die. Because Korea is so small, it would be a simple thing for rice farmers to make a deal with E-Mart, get an email saying "take your rice to store XYZ" and get their money in the bank, all in the same day. From field to store to the table all in a local region, handled by the least number of people. Effecient, good for the environment, supporting local business. But this is another example of the government getting IN our business instead of getting out. The Lotte Mart chicken from this last year is the perfect example. They haev scales of economy, they can sell tasty chicken at more than 250% less than the other places, why should the consumer be punished for that!?!?

Sorry to be long winded - back to the original question - what does the FTA do?

Simply put, a free trade agreement allows for free trade.

More realistically, it's thousands of pages of exemptions, waivers, and rules about what is and is not included. Over the next 10 years of so, many things will move from exempted to included - this is designed to give some people the time to get more training/switch fields.

Article at the bottom shows what prices are going to fall from the FTA. Lots of foods and consumer goods are going to lose between 10-30% of their price, which is quite noticeable. Kraft Velveeta cheese, grapes, pork, beef, etc will all be affected. American cars will become cheaper and more will be imported. Considering the US is Koreas number 2 (I think?) trading partner and Korea is the US's #7, lots of products will be affected.

The BS about the healthcare here being destroyed is just that - bullshite. The discussion about opening up for profit hospitals IS happening, but it is totally, 100% unrelated to the FTA.

Persoanlly, I'm totally stoked about the FTA. All the other FTAs - EU, Peru, Argentina, etc are good, but really, what do those places trade with Korea? Compared to the US, they comprise a drop in the bucket., The US IS the bucket. We're going to see some serious price changes coming because of this.

http://koreajoongangdaily.joinsmsn.com/news/article/html/572/2944572.html

[pkang0202]

Korean distributors are crooks. You would think, for a small country, goods can go from source to market very easily.

Nope.

The chain goes something like this:

Source (farm, factory) -> Major Distributor -> Regional Distributor -> Local Distributor -> Merchandiser -> Store Shelf.

The reason this system doesn't go away is because there a LOT of small, medium sized businesses whose entire business is distribution. They would literally wreak havoc all over the supply chain on any attempt to bypass them.

Costco gets around the system because of their distribution system is completely autonomous from other companies. They have strict requirements on price as well as quantity. Essentially, Costco sets the price of all goods in their stores. If Samsung tried to sell a TV in Costco higher than X price, Costco will tell them NO and threaten to kick out their brand and bring in a competitor.


Also, there is blatant price fixing in Korea. I witnessed firsthand how company ABC felt the price of their product was too low and called up all of their distributors to raise the price 15% gradually over the course of 2 months. The foreign headquarters knew about it and played the "see no evil, hear no evil" card. They knew illegal price fixing was occurring.


I saw a manager go on Danawa, price search a product and call up the lowest priced sellers directly and threaten them directly to raise their prices immediately.


Free-market does not exist here.[/code]

[chrisinkorea2011]

from what my gf told me, she said that they are trying to make it better for small owners so that they can turn profit and trade etc. she also told me that someone got pepper sprayed or tear gased as well when they had a meeting. But she said its a bunch of headaches and they need to fix it. (her major is international trade so i know she understands it more than I do lol)

[SMOE NSET]

Read it here:

http://fpc.state.gov/documents/organization/139259.pdf

The farmers aren't going to lose much really especially not for another 5-15 years as the tariffs slowly dwindle.

-No changes to the current rice tariffs.
-The beef tariffs decrease from the current 40% over the next 15 years.
-Orange farmers are safe as the free trade is only during the Korean citrus off-season. Maybe we can finally find limes here!
-Milk prices will slowly change over 10 years.

Cotton will be a lot cheaper so clothes manufacturers here should be better for it.
Nut prices will be cheaper as well as spirits and wine.

The biggest industry that is going to be hit will be the auto industry. The Korean auto industry must now play fair with the importation of U.S. cars. Read page 48 of the link I just gave. It describes it better.

There is more especially concerning intellectual rights but it is all in the link and I don't want to type it all out. It will be interesting to see how Korean plans to enforce these regulations.

[proverbs]

ok, so basically it seems like all the talk is about the farmers? i guess they are getting hit the hardest.

are there any other industries that will suffer? nathan pointed out that the health industry is not really affected by the FTA.

[meangradin]

i too wonder how this will affect korea? coming from bc, i have seen firsthand how fta in regards to lumber are constantly abused by the us when it doesn't suit their end; but that is another issue.

I think for the major korean goods made by samsung and hyundai, the agreement will be great. i think the americans underestimate how koreans really do prefer to buy korean made goods over foreign made ones. in regards to cars, i think many more americans will buy korean cars vs. koreans buying american cars.

however, this is only one small part of a total agreement. i have to echo previously stated sentiments that the fta should hit the farmers quite hard.

[nathanrutledge]