KEY POINTS:
South Korea and New Zealand have agreed to explore the feasibility of a free trade agreement.
President Roh Moo-hyun, visiting Wellington yesterday, said he was confident the study would find that an FTA would not harm the agriculture industry in Korea, as well as preventing any disadvantage New Zealand products face in the Korean market.
A joint study is to be undertaken next year by private research institutes in the two countries.
But President Roh said even when the results of the study came in it would take some time for his Government to persuade the Korean public of the need for an FTA and the advantages it could bring.
"In this respect I ask for your patience," he said.
Phil Lewin of the Apec Business Advisory Group said such comments were much better than used to be heard from North Asian leaders.
"It used to be that there was something uniquely and inherently different about agriculture and it was sacrosanct. So if President Roh is saying this is the right thing to do but it is going to take some time, that by itself suggests the ground is more fertile for a New Zealand-Korean agreement." The two countries carried out preliminary studies on a possible FTA following a visit by President Kim Dae-jung in 1999, which concluded it was in both countries' interests.
Nothing came of that but the incentive to conclude bilateral trade agreements has since increased with the collapse of the World Trade Organisation's Doha Round.
Such agreements can result in trade diversion, however, where more efficient producers in third countries are disadvantaged - as New Zealand kiwifurit growers have been relative to their Chilean counterparts since Korea and Chile concluded an FTA in 2004, for example.
Korea, in turn, could be at a disadvantage if New Zealand and China successfully conclude their FTA negotiations.
The two economies are highly complementary.
In the year ended October, New Zealand's exports to Korea, its sixth largest export market, totalled $1.3 billion, made up of agricultural products and materials such as wood, aluminium and hides.
Korea's exports to New Zealand, $1.1 billion in the same period, are dominated by consumer goods. There are also strong links in services trade, notably tourism and education.
New Zealand officials argue that any perceptions that an FTA would threaten Korean farmers are misplaced. New Zealand is not a rice producer, nor does it export items sensitive to Korea such as garlic, sesame, chilli and ginger.
