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Amid protestsÃ‚Â from thousands ofÃ‚Â famers,Ã‚Â laborers, and students, the U.S. and South Korea held their second round ofÃ‚Â free trade talks last week in Seoul.Ã‚Â While theÃ‚Â talks ended on a sour note due toÃ‚Â disagreements over pharmaceuticals, the two economicÃ‚Â powers did manage to agree on a timeÃ‚Â frame for phasing out tariffs.Ã‚Â As it stands, the FTA would remove nearly 90 percent of the tariffs on goods that flow between the two countries.
A commentaryÃ‚Â published last week by the Heritage Foundation does well in presentingÃ‚Â the many potential benefits of a free trade agreement between the U.S. and South Korea. Currently the world'sÃ‚Â tenth largest economy,Ã‚Â South KoreaÃ‚Â has grown rapidly as a result of past free trade agreements, and liberalized trade policies have certainly contributed to the nearly three-fold increase in real GDP per capita over the last 30 years. In addition, the country's large supplies of capital and highly-educated labor force, complemented by its stable legal system, enhance its potential for future growth. Currently, however,Ã‚Â regulations and state involvement prevent SouthÃ‚Â Korea from fully realizing itsÃ‚Â growth potential and becoming what Heritage refers to as a "fully free" economy.Ã‚Â Powerful labor interest groupsÃ‚Â are alsoÃ‚Â holding South Korea back, as theyÃ‚Â constantlyÃ‚Â block attempts at further trade liberalization.
Implementing the proposed FTA would be a step in the right direction for South Korea. As South Korean businesses are given more opportunities to trade freely with the United States, the protectionist sentiments that permeate the country would begin to weaken, and South Korea would take another step toward full economic freedom. Hopefully the two countries can get past their differences and realize an agreement that would enhance economic growth for both.