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The Impact of Free Trade Agreements (FTAs) on Business in the Republic of Korea

Author

Listed:
  • Cheong, Inkyo

    (Asian Development Bank Institute)

  • Cho, Jungran

    (Asian Development Bank Institute)

Abstract

The Republic of Korea (hereafter Korea) continues to promote an open-trade system via the conclusion of free trade agreements (FTAs), arguing that Korean enterprises will obtain considerable business opportunities under the FTAs the government has implemented. However, the FTAs that are currently being implemented in Korea are said to be beneficial only to some enterprises. This study presents new evidence from a survey conducted from July–August 2008 on 120 Korean firms. The paper explores critical questions regarding the utilization of FTAs, their perceived costs and benefits, perceptions of multiple rules of origin (ROOs), and policy and institutional support mechanisms for FTAs. One of the key findings is that most of the currently implemented FTAs in Korea were concluded with small- and medium-sized developing countries. Moreover, within these FTAs, the range of preferential tariffs is not very broad in scope; as such, only one out of five enterprises was found to be utilizing them. However, since the conclusion of FTAs with the United States and the European Union, Korean businesses have become very interested in utilizing those respective FTAs. The government should make efforts for early implementation of these FTAs. In the FTAs concluded by Korea, ROOs are strict and complicated. In future FTAs, a more neutral and lenient form of ROOs should be adopted.

Suggested Citation

  • Cheong, Inkyo & Cho, Jungran, 2009. "The Impact of Free Trade Agreements (FTAs) on Business in the Republic of Korea," ADBI Working Papers 156, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0156
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    Cited by:

    1. Kiki Verico & Yeremia Natanael, 2018. "Let’s talk about the Free Trade Agreement (FTA): The five ASEAN members highlighting Indonesia," LPEM FEBUI Working Papers 201823, LPEM, Faculty of Economics and Business, University of Indonesia, revised Jul 2018.
    2. Verico, Kiki & Natanael, Yeremia, 2018. "Let’s talk about the Free Trade Agreement (FTA): The five ASEAN members highlighting Indonesia," MPRA Paper 87947, University Library of Munich, Germany.
    3. Tandon, Anjali, 2021. "SME Related Provisions in Free Trade Agreements – An Analysis of India’s Strategic Focus," MPRA Paper 112772, University Library of Munich, Germany.

    More about this item

    Keywords

    free trade agreement korea; korea fta impact; korea fta trade business;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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