Abstract
This study attempted to analyze the protective effect on the garlic industry of excluding concessions in the Korea-China FTA (Free Trade Agreement) negotiations. To this end, various functions necessary for constructing the model, such as the cultivated area response function, demand function, price flexibility function, and import demand function, were estimated using the autoregressive distributed lag model. The analysis shows that the import volume increases while the domestic garlic cultivated area and production decreases due to tariff cuts, indicating that the concession carve-out contributes positively in terms of cultivated area, production maintenance, and self-sufficiency compared to the scenario of sensitive or general rollback. Meanwhile, farm households' gross revenue was slightly lower than the base scenario as the farmers received price and consumer price remained higher than those other than concession due to a decrease in domestic production. The current study has limited the analysis period to 2016 - 2020, but if the analysis period is extended, it can be expected that the reduction of cultivated area and the increase in imports will accelerate. Above all, a decline in self-sufficiency due to an increase in imports and a contraction in the production base due to a reduction in cultivated area will be a risk factor for the Korean garlic industry.
Figures & Tables
Fig. 1. Trends in garlic production in Korea. Source: Statistics Korea (2022).
