S Korea warns of collapse in free trade talks with US
(Yonhap)
Monday April 17, 2006
Asia Pulse
S. Korea Warns Of Collapse In Free Trade Talks With U.S
SEOUL, April 17 Asia Pulse — South Korea’s trade minister warned Monday that the upcoming negotiations on a free trade agreement (FTA) with the United States could collapse if the deal harms South Korean national interests.
"Clearly, there is a Maginot Line for the South Korea-U.S. free trade talks," Kim Hyun-chong said in a statement. "If our Maginot Line isn’t protected, it may lead to a potential failure following stalemated free trade talks with Japan in November 2004."
Kim’s warning was carried in a statement prepared for a question and answer session during a meeting with foreign journalists here.
Earlier in the day, Kim said in a press conference that his country is unlikely to sign an FTA with the U.S. that doesn’t address both sides’ interests in a balanced way.
"It will be very difficult for either country to receive the necessary domestic approval unless the overall package achieves a balance of interests that considers the concerns of the two countries," Kim said.
Kim, however, emphasized the importance of such a free trade accord to South Korea’s economy and security, saying the Korean government’s decision to pursue the deal with the U.S. was based on a careful strategic review.
South Korea and the U.S. agreed in February to begin their first round of formal free trade agreement talks on June 5-9 in Washington, with the aim of wrapping up the deal by the end of next March.
Kim’s comments came as Seoul and Washington were to hold a second round of preliminary talks on the same day in Washington.
South Korea and the U.S. have less than one year to seal the trade accord, as the American negotiators’ Trade Promotion Authority — the power to negotiate trade deals without amendment procedures from the U.S. Congress — will expire by the end of June 2007.
Given the seemingly short timeframe available, some analysts here were pessimistic about prospects for the negotiations with the U.S. It took more than four years before South Korea’s legislators ratified the nation’s first FTA with Chile in 2004.
"I can’t sign an agreement that doesn’t meet our negotiating objectives simply because time is ticking away," Kim said.
"Needless to say, what we agree on is far more important than when we agree," the minister added.
In order to launch the free trade talks with the U.S., South Korea has accepted four key demands from Washington, including cutting a quota system to protect local movies and lifting a three-year-old import ban on U.S. beef that was imposed due to mad cow fears.
South Korean President Roh Moo-hyun, whose five-year term will end in February 2008, has been under mounting public criticism
for accepting the U.S. demands without visible benefits from the trade pact.
On Saturday, about 17,000 farmers, students and unionized workers gathered in Seoul to protest the South Korean government’s move to sign an FTA with the U.S.
The demonstrators claimed the free trade accord with the U.S., if signed, will surrender Seoul’s economic sovereignty to Washington, and promised their utmost efforts to block the deal. No injuries were reported during the demonstration.
For the U.S., a trade accord with South Korea is part of its goal of reducing trade barriers in the agriculture, automobile, pharmaceutical and services sectors, according to a report by the U.S. Congress’s research department in February.
Besides the economic gains, the deal with South Korea is also expected to strengthen Washington’s geopolitical profile in Northeast Asia, a region which is economically becoming more and more reliant on China, the world’s fastest-growing market.
For South Korea, a free trade pact with the U.S. would provide improved access to the world’s largest market, according to the trade minister on Monday.
"South Korea had a trade surplus of US$15 billion with the U.S. in 2004, and it was $10 billion last year," Kim said. " With this free trade agreement, U.S. investment in Korea is expected to increase by $17.8 billion to $22.3 billion...allowing the Korean economy to create more than 100,000 new jobs."
In 2004, two-way trade reached $71.4 billion, according to U.S. and Korean government figures. In 2005, the U.S. was South Korea’s third-largest trading partner, second-largest export market and largest supplier of foreign direct investment, the U.S. Congress report said.
Another big entanglement for the South Korea-U.S. trade pact is expected to be goods manufactured at an industrial complex for South Korean companies in the North Korean border city of Kaesong, people familiar with the situation say.
South Korea wants the U.S. to recognize products made in the Kaesong industrial complex as South Korean goods, in a move to further promote the inter-Korean economic cooperation project. About 15 South Korean companies are now producing goods, mostly household items and clothes, in Kaesong, which is less than a two-hour drive from Seoul.
But a senior economic official at the U.S. Embassy in Seoul said earlier that the so-called Kaesong matter was not a subject of negotiation for the free trade deal.
"In our view, the FTA applies to goods produced only in South Korea and the United States," the official said on condition of anonymity at a press briefing on Feb. 8.
"One danger of launching FTA talks is that differences over strategic issues, particularly in dealing with North Korea, could negatively affect the negotiations," Mark Manyin, an Asian affairs analyst, wrote in the U.S. Congress report.
