The Korea-Australia Free Trade Agreement (KAFTA) was implemented on December 12, 2014. The agreement aimed to create a more open market by eliminating tariffs on various goods and services between the two countries. Although the agreement was intended to bring benefits to both Korea and Australia, there are some disadvantages that need to be highlighted.
Here are some of the disadvantages of the KAFTA:
1. Impact on Domestic Industries: KAFTA has opened up the Korean market to Australian industries, including agriculture and manufacturing. This has led to increased competition for domestic industries, particularly in the agriculture sector. Korean farmers have been struggling to compete with cheaper imports of fruits, vegetables, dairy products, and meat from Australia.
2. Job Losses: As a result of the increased competition from imports, Korean businesses that were previously thriving in the domestic market have had to cut jobs, resulting in unemployment. This has had a significant impact on the Korean economy, with some estimates suggesting that as many as 50,000 jobs have been lost.
3. Intellectual Property Rights: KAFTA has been criticised for failing to adequately protect intellectual property rights, particularly in relation to pharmaceuticals. The agreement allows for the importation of cheaper generic drugs from Australia, which could impact the Korean pharmaceutical industry and limit innovation in the sector.
4. Environment: The increased trade between the two countries could also lead to negative environmental impacts. Increased transportation of goods between the two countries could lead to higher carbon emissions, which could harm the environment.
5. Social Impacts: The KAFTA could also have some negative social impacts. The increased competition in the domestic market could lead to higher levels of inequality, with smaller and less competitive businesses struggling to compete with larger and more established businesses.
Overall, the KAFTA has had some negative impacts on the Korean economy, particularly in the agriculture sector. While the agreement was intended to bring benefits to both countries, it is important to carefully consider the potential disadvantages and work to address them where possible. As with any free trade agreement, it is essential to strike a balance between the benefits of increased trade and the need to protect domestic industries and jobs.
