Trade Policy and National Economic Interests in Korea

Membership in the World Trade Organization (WTO) and participation in free trade agreements (FTAs) are important instruments for governments to realize national economic interests. The Republic of Korea has been particularly successful in doing so. As the experience of Korea shows, a trade policy mix between multilateral liberalization under the WTO and preferential liberalization through FTAs allows the government to optimally balance national interests and strive for higher levels of social welfare and economic effectiveness, while simultaneously protecting national industries. However, such results seem to be possible only if national economic interests are clearly defined and are synchronized with a country's goals regarding WTO membership and its strategy for FTAs. During recent decades, Korea has practiced an active long-term planning of trade policy so that trade benefits are not excessively concentrated in a narrow range of trade actors and are distributed more evenly in society. This meant appropriate balancing of liberalization and protection measures, reinforced by special support programmes that neutralized the negative impact of higher market openness. In this article, Korea's strategy regarding trade policy is analyzed, including the reasons Korea pursued an FTA-centric policy and the benefits it obtained in addition to those it obtained from WTO membership.