The FTA, free trade agreement, between U.S. and South Korea was successfully signed by both nations in 04/02/2007. During the negotiations of the detailed parts of the agreement, both of the nations were careful in not falling into the Prisoner’s dilemma. Both U.S. and South Korea could insist on achieving the maximum profit from the FTA, but conflicts became evident in few industries. For example, U.S. insisted on opening up the Drug industry of Korea and the removal of the existing restriction, while Korea held a stronghold against opening it up. Conflicts like this could encourage the two parties to become egocentric and could lead to the worst case of withdrawal of the FTA. This is parallel to the case where both Prisoners chose to convict. Both being aware of the danger, the nations were generous on giving up certain industries. The following list shows how intense the negotiation was, and how both Korea and U.S. gave up certain industries to avoid Prisoner’s dilemma.

Oct. 2005 – Korea gives up the restriction of drug testing and evaluation.
Jan. 2006 – Withdrawal of the embargo of the American beef
Feb. 2006 Declaration of the KORUS FTA
May 2006 KORUS FTA 1st negotiation (Washington, US)
July 2006 KORUS FTA 2nd negotiation (Seoul, Korea)
Sep. 2006 KORUS FTA 3rd negotiation (Seattle, US)
Oct. 2006 KORUS FTA 4th negotiation (Je-Ju, Korea)
Dec. 2006 KORUS FTA 5th negotiation (Montana, US)
Jan. 2007 KORUS FTA 6th negotiation (Seoul, Korea)
Feb. 2007 KORUS FTA 7th negotiation (Washington, US)
March 2007 KORUS FTA 8th negotiation (Seoul, Korea)
Apr. 2007 Agreement signed by both nations
May 2007 disclosure of the FTA document
June 2007 Additional agreement of certain industries compromised

US got the withdrawal of the embargo of American beef in Korea and the open market of the Korean drug industry, while Korea got rid of most of the tax put on LCD or digital TV. The two nations were successful in achieving advantage in some industries that are profitable and sacrificed some industries that will become vulnerable to imports. However, the nations were successful in avoiding the worst case of Prisoner’s dilemma and now have advantages over other outside nations in trading products and services. It can be said that both US and Korea ‘Did Not Convict’ in the case of our class example.

Reference

KOREUS FTA website
http://fta.korea.kr/new/sub.htm