Chevron threat to reject Korean trade deal
Financial Times
Chevron threat to reject Korean trade deal
By Eoin Callan in Washington and Anna Fifield in Seoul
March 28, 2007
US companies, led by Chevron, are threatening to withdraw support for a trade deal with South Korea, because they claim it leaves that country free to expropriate foreign assets and arbitrarily restrict the flow of capital.
The companies are demanding that tougher investor protections be added. US and South Korean trade negotiators have until midnight on Friday to break the deadlock in key areas such as cars and agriculture to take advantage of George W. Bush’s authority to fast-track trade deals.
The loss of support from key US industries could weaken the Bush administration’s ability to approve Washington’s biggest trade pact in more than a decade.
A US Chamber of Commerce official said: "Lack of transparency and regulatory unpredictability has been a major problem for investors in South Korea that this agreement needs to solve."
Investor protection in South Korea has become an increasingly topical issue with the long-running investigation into the way Lone Star, the US private equity fund, acquired Korea Exchange Bank in 2003.
Against a backdrop of rising economic nationalism, the state audit board has called for the purchase to be nullified on the grounds that Lone Star bought the bank at an artificially cheap price in the wake of the 1997 Asian financial crisis.
The Korean government has repeatedly said it will treat foreign investors fairly and in accordance with the law.
Lobbyists for Chevron say diluted investment rules under negotiation could leave its joint-venture refinery with LG Group - one of Asia’s biggest - legally vulnerable to expropriation.
South Korean officials were unavailable for comment.
