"Up to 35 Million Won Per Person"… FTA Domestic Support Measures Offer 'Direct Assistance' [FTA Transforming Agriculture] ①

South Korea Builds the World's Largest Economic Playing Field
Farmers Suffering Price Losses from FTAs
Receive Up to 35 Million Won per Individual, 50 Million Won per Corporation

As of the third quarter of this year, South Korea is engaging in trade utilizing Free Trade Agreements (FTAs) with 59 countries through the implementation of 22 FTAs. This achievement comes approximately 21 years and 5 months after the Korea-Chile FTA, South Korea's first FTA, came into effect in April 2004. The government now aims to further expand and strengthen its FTA network, which currently covers about 85% of the global GDP, to reach 90%, the highest level in the world.

With the expansion of the FTA network, South Korea's export markets have broadened, and export volumes have surged from 253.8 billion dollars in 2004 to 683.6 billion dollars in 2024, marking a 2.7-fold increase. Last year, exports to FTA partner countries amounted to 544.8 billion dollars, accounting for 80% of total exports. FTAs have played a significant role in boosting South Korea's exports.

President Donald Trump signed a proclamation imposing a 25% tariff without exceptions on steel and aluminum products imported into the United States, and also announced that tariffs on automobiles and semiconductors are under consideration. On February 13, 2025, export vehicles were waiting to be loaded at Pyeongtaek Port in Gyeonggi Province. Photo by Kang Jinhyung

According to the Korea Customs Service on December 9, the FTA utilization rate in the third quarter of this year was 86.8%. The FTA utilization rate is an indicator of how extensively companies are actually using the FTAs in place. It represents the proportion of export and import transactions eligible for FTA benefits that actually received tariff benefits. A higher utilization rate means that more transactions are benefiting from tariff reductions through FTAs.

Although South Korea has built an extensive network with a total of 22 FTAs, there have also been damages, particularly in vulnerable sectors such as agriculture and fisheries. In response, the government is providing support to minimize the impact on farmers and fishermen and to help turn these challenges into opportunities.

The most notable example is the FTA domestic support measures, into which a total of 39 trillion won has been invested. Among these, the Direct Compensation Program for Damage is a system designed to stabilize the management and livelihoods of farmers and others by providing direct support for losses caused by the implementation of FTAs. For products that suffered price declines due to a sharp increase in imports following FTAs, the program compensates for a portion of the price drop. The compensation is capped at 35 million won per individual farmer and 50 million won per agricultural corporation. To date, 2.4457 trillion won has been provided. Since the Korea-Chile FTA, starting with Campbell grapes, and during the Korea-US FTA in 2012, compensation was provided for beef, pork, and other products. This year, compensation is being provided to farmers producing mung beans, who have suffered losses due to the Korea-Peru FTA.

While direct compensation addresses immediate, tangible losses, measures to enhance competitiveness by product and fundamentally improve the agricultural sector are designed to help agriculture remain competitive under FTA conditions. A total of 21.9918 trillion won and 15.1127 trillion won have been allocated to these efforts, respectively.

Product-specific competitiveness enhancement mainly supports the livestock, fruit, and horticultural sectors. To strengthen livestock competitiveness, the government is supporting the modernization of slaughter and processing facilities for cattle and pigs, as well as the construction of new facilities and equipment for egg storage. For example, the Integrated Bugeong Livestock Products Market of the Bugeong Swine Cooperative, which received a 3.6 billion won government loan in 2023, invested the entire project budget in upgrading slaughter and processing facilities. As a result, the number of cattle processed for primary meat packaging increased by 87.7%, from 3,597 head in 2019 to 6,751 head in 2023, while sales volume rose by 92.6%, from 1,385 tons to 2,668 tons over the same period. The Porkville Livestock Products Market of the Daejeon Chungnam Swine Cooperative, which received a 4.5 billion won operating loan in 2022, used the funds for member farm operations, facility upgrades, and the purchase of live animals and raw meat, resulting in increased slaughter volumes and operating rates. In 2023, the number of cattle slaughtered was 72,000, up 24.0% from 2022, and the operating rate increased by 14.6 percentage points, from 60.7% to 75.3%. The number of pigs slaughtered rose by 7.1%, and the operating rate increased by 6.2 percentage points.

The support funds for supplementary measures are also being used to strengthen the competitiveness of fruit producers. A farm in Seogwipo, Jeju, which cultivates early-season tangerines and Redhyang on approximately 5,000 pyeong (16,529 square meters), received support through the Fruit Quality Facility Modernization Project from 2021 to 2022. With a total investment of 222.77 million won (116.93 million won in subsidies), the farm installed windbreak nets, rain shelters, air circulation fans, and ventilation fans. As a result, sales increased from 33.33 million won before the project to 53.33 million won. Notably, operating costs fell sharply from 27.6 million won to 14.5 million won, resulting in higher farm income due to increased sales and reduced expenses.

The FTA supplementary measures are also supporting the development of agricultural talent, strengthening the capabilities of agricultural management entities, promoting eco-friendly agriculture, and expanding exports of agricultural products. For example, the Mungyeong Omija Valley Agricultural Cooperative increased its exports from 15 tons in 2017 to 48.9 tons in 2018, a 224.4% increase, by participating in the Global K-Food Fair since 2018 with support from the Export Infrastructure Enhancement Project.

An official from the Ministry of Agriculture, Food and Rural Affairs stated, "Since the Korea-Chile FTA, the government has been formulating and implementing domestic support measures to compensate for damages to farmers and enhance the competitiveness and structure of agriculture in response to the expansion of agricultural market openings due to FTAs. We will continue to make every effort to ensure that FTAs serve as opportunities, not crises, for the agricultural sector by thoroughly establishing and implementing future supplementary measures."

<Production Support: Ministry of Agriculture, Food and Rural Affairs · Korea Rural Economic Institute>