Chief US negotiator likens South Korean-US trade process to dating
MSU News
Chief U.S. negotiator likens South Korean-U.S. trade process to dating
December 06, 2006 — By Carol Flaherty
Wendy Cutler, the chief negotiator of a proposed free trade agreement with South Korea, told an audience at Montana State University Tuesday that the process is much like dating — both countries were ready to find out how compatible they could be on trade issues.
Cutler visited campus between negotiations at Big Sky Resort.
The negotiations are an outgrowth of the changing Asian scene as well as trade needs. South Koreans are looking at China’s emerging manufacturing sector, wondering what it means for South Korea’s future, and hoping to "hook up with" the United States, she said. In addition, Cutler said the nuclear development of North Korea "cemented" for the South Korean people the need to strengthen its U.S. alliance.
U.S. trade negotiators were looking for an Asian trading partner, and South Korea wanted to open its economy after a 1997 financial crisis, when many foreign investors withdrew from South Korea, Cutler said. Japan wasn’t an option for a free trade agreement with the United States, because it wasn’t willing to discuss agricultural issues at this time, she said. China, meanwhile, has been approaching many Asian countries proposing limited trade agreements.
Asked for examples of major trade issues, Cutler cited agriculture and textiles. Agriculture is a "very sensitive" issue for Korea, where most production is on small family farms run by the older generation. Sen. Max Baucus, the new leader of the Senate Finance Committee and a member of the Senate Agriculture Committee, has been quoted as saying there will be no agreement that doesn’t include free trade of agricultural products. Other issues being hammered out by more than 300 people in 19 trade committees meeting this week at Big Sky are financial services, express delivery, legal services, broadcasting, automotive issues and intellectual property rights.
As chief negotiator, Cutler said she hopes to be a conductor coordinating the work, but more often feels like a fireman.
"People come to me with problems, and I try to see how we can get the negotiations back on track," she said. She said the talks need to remain respectful and aware of the other side’s issues in order to be constructive.
Whatever the negotiations, if either side is going to give something up, they have to be able to tell their public, "but look what we brought home."
One of the problems is that the issues are not as simple as was the case many years ago when tariffs were almost the only issue negotiated, she said.
There are many other barriers to free trade. Demetrios Marantis, international trade counsel for the U.S. Senate’s Committee on Finance, gave several examples of details an effective trade agreement needs to resolve to be effective. For instance, reduced tariffs are ineffective when there are higher sales taxes on U.S. goods than on Korean goods. Even equal tariffs and taxes would do little good if there are no published manufacturing guidelines for U.S. manufacturers to follow. The issue of guideline transparency is one of the major subjects being worked on by the trade teams, with the United States hoping to move South Korea toward published standards that are available to all manufacturers.
All of this is working under what Cutler called the de facto "drop dead" deadline of the June expiration of the Legislative Trade Promotion Authority that lets Congress say yes or no to an agreement, but not ask for specific changes. There would be no negotiations if the other side knew that the agreement would be modified by Congress, she said. Though the authority expires in June, for all practical purposes negotiators have only until March.
Cutler said the outcome of the negotiations is important because of limited trade agreements proliferating between various Asian countries and that this would be the first U.S. free trade agreement with an Asian country. "Everyone is watching," she said. Japan is watching because free trade could give Korea improved access to the U.S. automotive market.
"Drop dead is March, so we have a lot to do," Cutler concluded.
