On 1 April 2007 Korea and the United States finally completed their year-long negotiations to conclude the Korea- U.S. Free Trade Agreement (KORUS FTA), which was then signed by the representatives of the two states on 30 June 2007 in Washington, D.C. (MOFAT 2007a; 2007b). The agreement is currently waiting for ratification by the legislative bodies of the two countries. The ratification process has been delayed for more than a year, and in the middle of the U.S. election year the general perception seems to be that the ratification probably will not happen in the immediate future. Nonetheless, the two governments have repeatedly expressed positive views on the prospect of ratification within 2008 or early 2009 and confirmed that they would continue to exert best efforts to get it done as soon as possible. Once ratified, the agreement then goes into effect 60 days after the exchange of instruments notifying the other side of the completion of the domestic procedure (USTR 2007, art. 24.5).

Korea has concluded approximately 2,500 treaties since its inception in 1948, but probably none of them has caused such heated controversy and debate as we are observing with respect to this particular agreement. Opponents of the KORUS FTA in Korea have been strongly criticizing this agreement, stating it will lead to eventual eschewal of Korean sovereignty in various vital national policy areas by integrating the economic system of Korea into that of the United States. Proponents of the agreement, in contrast, argue that the KORUS FTA will offer a crucial stepping-stone to revitalizing the Korean economy by increasing the trade volume with the United States and upgrading the regulatory system and market structure in Korea. Korea has been sharply divided over this agreement. The situation in the United States does not seem to be that much different, although the national division may not be as acute as in Korea.

In this process, the prospective benefits and side-effects of the KORUS FTA have been relatively well studied and documented (McDaniel and Fox 2001, 5–9, 5–22). These studies collectively seem to indicate that both countries will enjoy economic benefits in the long run, although there may be some political repercussions and economic readjustments in the immediate aftermath of the FTA.

Setting that issue aside for now, this paper aims to discuss briefly what the bilateral economic relationship would be like without the KORUS FTA: Would the absence of the FTA better serve the bilateral economic relationship? Would the two countries be able to manage the bilateral economic relationship more efficiently but for the FTA? Would the FTA indeed make the Korean government vulnerable to unnecessary disputes at various levels that would never arise but for the FTA? This paper then concludes that most of the problems allegedly to be caused by the KORUS FTA will probably be there anyway, regardless of the FTA, and that, although not perfect, the FTA could provide a more workable framework in which to manage these problems.