South Korea plans to actively use its tariff quota system to cope with supply-side instability that can fuel inflationary pressure in 2012, the finance minister said Monday.
In a meeting with economic policymakers, Bahk Jae-wan said Seoul plans to use the flexible tariffs to stabilize prices of products that may experience supply shortfalls.
“There may be supply problems with products such as rice, dried chili peppers, garlic and pork in the coming months that can affect consumer prices,” he said.
The country gave preferential tariffs on a maximum of 116 products this year to deal with such developments as the drop in local farm and meat products caused by bad weather and the foot-and-mouth disease outbreak.
The government expects consumer prices to rise 3.2 percent next year compared to a 4 percent gain forecast for 2011.
“The tariff system will be used mainly to control spikes in import prices and handle domestic shortages, but can be expanded to assist farmers and small and medium enterprises affected by various free trade agreements,” the policymaker said.
The free trade pact with the European Union went into effect in July, while the bilateral deal with the United States is expected to be implemented early next year.
He stressed that active measures will be taken prevent price gains that directly impact consumer spending, with emphasis put on the timely release of government controlled products such as rice to prevent sudden hikes.
Seoul will permit the private sector to import more products if the need arises to control overall prices, Bahk said, adding the central government will talk with regional administrations to limit public utility cost gains in 2012. (Yonhap News)