The Koreas

Korea-China Free Trade Deal Likely a Major Blow for Small-Time Traders

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The Koreas

Korea-China Free Trade Deal Likely a Major Blow for Small-Time Traders

Socially and economically vulnerable, small-time traders look set to lose their livelihoods as tariffs disappear.

Visit Incheon Port International Passenger Terminal and you’ll quickly spot huge but shabby carriers, boxes sealed by tape numerous times, and middle-aged people with mobile phones. These are small-time traders who make money selling goods from South Korea to China or vice versa, including cosmetics, small home appliances, and agricultural produce.

The terminal links South Korea to China’s Qingdao or Weihai, where many Korean-Chinese reside. It has always been so crowded with these traders that it has created a special passageway for them to minimize inconvenience to tourists.

That might change in the near future, however, as South Korea and China have recently concluded a free trade agreement. Under the deal, the two countries will be required to eliminate their import tariffs on more than 90 percent of all products traded between them within 20 years, of the deal taking effect. This is likely to have a major impact on small-time traders, who have benefited from the tariff differences between the two countries.

In fact, Incheon Port International Passenger Terminal has already seen a decline in the number of these traders in recent years. According to Incheon Port Passenger Terminal Center, 918,437 passengers used the terminal last year, of whom roughly 30 percent were traders. That is down significantly from 2011, when an estimated 45 percent of passengers were traders.

Another popular hub for the traders, Pyeongtaek Port, has also seen a drop in numbers. According to Gyeonggi Pyeongtaek Port Corporation, about 66 percent of passengers were estimated to be small-time traders in 2011, falling to 51 percent in 2013.

“Since South Korea and China started talking about the FTA deal, the two countries have beefed up regulations on the traders by stressing negative aspects such as the smuggling of unauthorized products,” said Kim Jeong-hoon, a team leader at Gyeonggi Pyeongtaek Port Corporation’s PR and Marketing team.

Kim explained that a decrease in the number of traders is inevitable, and the focus should now rather be on their welfare as they are considered to be vulnerable social group. In fact, most of the traders are in their 50s or older, without any stable income.

Gyeonggi Pyeongtaek Port Corporation held a business fair in October last year and announced plans to improve conditions for traders. The corporation said that it would expand benefits for traders, including medical support. The corporation is currently running a medical center at the port for the traders.

“When South Korea was going through its financial crisis, the government encouraged people to get into this [trading] business. But now they are suffering with increased regulations, and now FTA deal is about to kick off,” said Kim. “The corporation has no authority to decide whether they are violating laws or not, but one clear thing is that they need to be taken care of, and that’s why we are trying our best to improve conditions for them,” he added.