Upgrading the ‘software’: The EU–Korea Free Trade Agreement and sociocultural barriers to trade and investment

Abstract

In October 2010, the European Union (EU) and the Republic of Korea signed a free trade agreement that went into effect in July 2011 and aims to increase levels of bilateral trade and investment by dismantling existing tariff and non-tariff barriers. In this article, we highlight the importance of a third class of barriers: social, cultural and institutional barriers to trade with and investment in Korea that cannot be legislated for under the new agreement but that can serve as ‘hidden stumbling blocks’ to its implementation and effectiveness. We argue that the phenomenon of ‘mismatched globalization’ (in which economic globalization outpaces cultural globalization) is still apparent in Korea, as evidenced by the continuing existence of these ‘soft’ barriers which include, inter alia, the gap between policy and implementation; the lack of predictability, consistency and transparency in the regulatory environment (including IPR protection); education systems; labour militancy; and attitudes towards globalization. These findings resonate with Dent's (2006 Dent, C. M. 2006. New Free Trade Agreements in the Asia-Pacific, Basingstoke: Palgrave Macmillan. [Crossref] , [Google Scholar]) argument that ‘deficient capacity’ in terms of technocracy, industry and/or institutional arrangements can pose problems for developing countries seeking to negotiate and implement bilateral trade agreements with more developed countries. In the case of Korea, the long-term ‘soft’ social, cultural and institutional barriers identified and discussed in this article act as a constraint on the country's institutional capacity functions and thus have the potential to hinder the full and effective implementation of the EU–Korea Free Trade Agreement and reduce the economic benefits that the signatory parties hope to gain from it.     

Political party and party system institutionalization in Southeast Asia: lessons for democratic consolidation in Indonesia,the Philippines and Thailand

Abstract

This article analyses the Kim Dae-jung government's industrial realignment (‘Big Deals’) policy in post-crisis Korea, which offers a valuable insight into the state's role in managing the transition from a developmental state to a free-market economy and into the changing nature of government–business relations. Although Kim was committed to creating a free-market economy in Korea, as the ‘Big Deals’ got under way critics accused him of violating market principles and employing tactics of intervention and coercion used by previous authoritarian regimes. The ‘Big Deals’ experience suggests a further stage in the evolution of the Korean developmental state; the dismantling of state powers and the implementation of neoliberal reforms in the 1990s had led to the emergence of a ‘transformative state’ in which the state acted as ‘senior partner’ rather than ‘commander-in-chief’. The transitional state charged with the task of rebuilding the economy after 1997 regained some of its lost powers and used some familiar methods of achieving its ends. However, it also demonstrated by the nature and scope of its interventions that it was gradually evolving and adapting to meet the changing economic environment. Although Kim's actions prompted allegations from the chaebol and their conservative allies of a return to autocratic economic management by the government, it was clear that the developmental state had not been resurrected. Rather, these criticisms serve to highlight the continuing antagonism in the state–business relationship; neither side had developed new strategies for dealing with each other and their relations were still characterized by mutual mistrust and staunch chaebol resistance to key reforms demanded by the government. Although suspicions of a permanent return to extensive state intervention were unfounded, they nevertheless diminished the prospects for the creation of a cooperative relationship between the state and big business that would be a crucial factor in revitalizing the Korean economy.