Since the conclusion of its first FTA with Chile in 2003, Korea concluded FTAs with Singapore, the EFTA and ASEAN. FTAs with the U.S., India, and EU were signed in April 2007, August and October 2009, respectively; and are currently awaiting approval for ratification. The Korean government is currently negotiating FTAs with Canada, Mexico, the GCC, Australia, New Zealand and Peru. Korea's robust FTA policy is mainly due to expectations of benefits from bilateral/regional economic integration; including efficient resource allocation, economy of scale, and enhanced productivity, among others. Trade statistics during recent years reveal that trade with FTA members such as Chile, Singapore, and the ASEAN has increased dramatically. In addition, the Korean experience shows that the FTAs provided Korea with opportunities to upgrade economic infrastructure and adapt itself to global standards. This study aims to study the mid- and long-term policy directions to take maximum advantage of current FTAs. It focuses on national policies to tackle the challenge of FTAs rather than external negotiation strategies. Specifically, this study examines the effects of FTAs such as the EU, the NAFTA, and the CER on production, employment, and industrial structure in the OECD. This study implements the following two-stage approach. First, it will apply an unbalanced nested error components model to the pooled data for the full 30 country, 16 industry, and 24 year sample. Second, it implements both one-way and two-way error component regression models to take care of fixed effects and random effects along with country-specific and time-specific characteristics. This study demonstrates that the coefficient on FTAs is statistically significant and positive, when we apply the nested error components model to the pooled data on the full 16 industries in the OECD, meaning that FTAs tend to enhance the production and employment structures. When we analyze country-specific and time-specific effects using the fixed effects model as well as the random effects model for the six industries, the coefficient on FTAs turned out to have different signs depending on the industry. The FTAs tend to increase the production share of the metal industry but decrease textile and business services industries, which are statistically significant. The effects of FTAs on production shares in agriculture, food, and transport industries turned out to be statistically insignificant. On the other hand, the FTAs tend to decrease employment shares of agriculture, food, and business services industries, but increase those of metals and transport industries. This study also conducts case studies in the agricultural industry, the manufacturing industry and the services industry, which shows how countries have implemented structural adjustment policies in order to cope with the economic shocks that an FTA brought about. For the case of the agricultural industry, this study selected the avocado and corn industries of Mexico, the dairy industry of Australia, and the fishery industry of Denmark. In addition, reviewed among the manufacturing industry were the textile and apparel industry of the U.S., the automobile industry of Poland, the steel industry of the EU, and the shipbuilding industry of Australia. The services industries examined here include the health services industries of Thailand and Japan, and the finance industry of Mexico. As a result of FTA or market opening in general, one expects that trade and investment would increase, resources will be distributed effectively, and scale economies realized. However, these fruits of FTAs require considerable effort. Results of the case studies brings forward the important policy implication that countries should invest more effort into domestic industrial adjustment and institutional improvement, since FTA policy itself does not automatically give rise to economic benefits for the signatory state. This study analyzes the effects of FTAs through quantitative as well as qualitative approaches, thereby providing the policy implications from experiences of the OECD countries. When we reviewed Korea's national policies for handling the challenge of FTAs, it turned out that they were not fully effective in spite of notable achievements. In this respect, Korea's trade and structural adjustment policies should be implemented in the following direction. First, Korea will have to strengthen competitiveness in the newly growing and high-value-added industries where most benefits of FTAs are expected. The structural adjustment policies should be time-bound with a clear exit strategy, and their transparency should be enhanced to make sure that government budgets are executed effectively and negative consequences from FTAs addressed properly. Second, trade and foreign direct investment (FDI) policies should be upgraded to the level of advanced countries, especially in terms of service liberalization and legal institutions related to FDIs. In addition, the utilization rate of FTA preferential tariffs should be enhanced in order to maximize profits without any additional costs. Korea should take follow-up measures to address obstacles to the utilization of FTAs by businesses. Third, Korea can address the consequences from FTAs only when such effort is accompanied by trade adjustment policies. Especially, a simple scheme of injury compensation is not enough. The trade adjustment assistance program, a useful policy tool to minimize injuries of market opening, should be effectively developed and managed; inclusion of regional support scheme can be a part of the future progress. Fourth, the Korean government must also improve economic infrastructures as well as legal bases for economic activities; such as factor market regulations, competition law, etc.