Even though Factor Price Equalization (FPE) provides significant implications in international trade, it tends to not be supported fully by empirical evidence. The holding of the FPE with non-stationarity of time series data under newly arranged international environment was tested by utilizing the cointegration methodology by Johansen-Juselius and the error-correction model (ECM) for data from Korea, the U.S and Japan. Results revealed that the relative FPE by commodity prices does not hold in general in the long run. Furthermore, general equilibrium is not supported even in the short run in most cases. As for the relative factor prices, long-run relationships were shown in some cases, not all. Also, no evidence was found for holding the FPE even in the short run. It also has to be mentioned that an open economic system does not help support the FPE. The paper is basically designed to test if the FPE in Korea is held with its major trading partners at the macro aspect under newly arranged international environment. However, it is agreeable that the implication of empirical findings is limited because of the issue on aggregation. Accordingly, further concern on this issue is expected in the future.
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