FTA best trade option for Korea, US: Further delay in talks may jeopardize bilateral relationship

Korea Times, 10-25-2005

FTA Best Trade Option for Korea, US - Further Delay in Talks May Jeopardize Bilateral Relationship

By Seo Jee-yeon
Staff Reporter

An influential official of the U.S. business community says the U.S. could put aside Korea as a trade partner for free trade agreement (FTA) talks if no progress is made to resolve bilateral trade issues in the next six months.

``It would be ideal for the U.S. and Korean governments to launch the FTA negotiations as soon as possible, and certainly within the next six months,’’ Myron Brilliant, president of the U.S.-Korea Business Council, said in an e-mail interview with The Korea Times.

`` If our two governments can’t make progress on outstanding bilateral trade issues, both may elect to pursue other trade initiatives. The U.S. is considering a range of potential trade agreement negotiations, and as the Council president I hope that an FTA with Korea will be at the top of this list. Our concern would be that, absent progress, the U.S. government will instead pursue other options.’’

Korea’s Ministry of Trade allegedly has made all-out efforts to launch the FTA negotiations with the nation’s second largest trade partner after China around the time of the Asia-Pacific Economic Cooperation (APEC) Leaders Meeting, which will held in Pusan between Nov. 18-19.

But skepticism on the timeline heads up as it seems to take more time to resolve trading issues, including the reduction of the nation’s screen quota and the resumption of the U.S. beef imports, both of which the U.S. suggested as preconditions to start the trade pact talks.

Despite difficulties ahead, Brilliant urged the Korean government to show progress in such controversial trade issues within six months.

His timeline was made based on the impact of the U.S. political environment on the future of the Korea-U.S. FTA talks.

``U.S President is authorized by Congress to negotiate “fast track” trade agreements under the Trade Promotion Authority (TPA), which was renewed this July. The current TPA terms ends in late 2007, and renewal of TPA in Congress will be a much more challenging process at that time given that 2008 is a presidential election year,’’ he said.

``As we saw during the Dominican Republic - Central American Free Trade Agreement (DR-CAFTA) vote this year, there is currently a challenging environment for trade agreements in the U.S. For this reason, if U.S.-Korea FTA talks are not launched within the next six months it will be difficult to conclude these negotiations and bring this agreement before Congress for ratification prior to TPA renewal, which could hold up this process considerably,’’ he said.

He advised Korea not to miss the best momentum to create a FTA between the two nations, which will boost bilateral relations in many respects.

``As we build a stronger bilateral economic relationship, this will also reinforce the critical alliance between our two countries,’’ he said.

Brilliant predicted the biggest trade issue between Korea and the U.S. would be whether to launch the FTA talks.

``We believe there is significant interest among both the Korean and U.S. business communities and in both governments. So long as the political will exists, we believe now is an opportune time to proceed,’’ he said.

Improving Regulatory Environment for FDI Attraction

When asked about what is needed to attract more foreign direct investment to Korea, the vice president for East Asia, US Chamber of Commerce, pointed out the improvement in the nation’s regulatory environment.

``Regulatory transparency and fairness are overarching concerns for many foreign investors in Korea,’’ Brilliant said. ``We have concerns about recent signals coming from the Korean government on tax and other regulatory matters.’’

It is often heard from the foreign business community that Korea’s regulatory environment is complicated and lacks consistency.

``We hope the Korean government will recognize the critical importance of ensuring a level playing field for both domestic and foreign players. At a time when Korea is working to establish itself as a regional commercial hub, it should not be sending chilling messages to investors,’’ said Brilliant.

He added the Korea-U.S. Business Council wants to support greater investment in Korea and hopes that the Korean government shares this objective and will undertake steps to show strong support for foreign direct investment.

Other areas where he’d like to see more substantive progress are the labor market and financial services market.

Brilliant also recommended Korea use APEC to promote its national initiatives to the world.

``APEC is very important for Korea. First, APEC is an opportunity for Korea to showcase itself and its world leadership in information technology, biotech, and across other areas, as well as its eagerness to attract FDI. Second, APEC is a gathering of world leaders that together represent over 50 percent of global GDP,’’ he said.

``APEC should serve to create momentum on many key initiatives. These include building momentum for a successful World Trade Organization Ministerial in December in Hong Kong, a regional commitment to enhancing regional security, addressing the threat of Avian flu, and advancing progress on other critical issues including intellectual property protection in the region. Korea’s role as host country for APEC is important to ensuring progress on these goals,’’ he said.

Also, he hoped that APEC would create opportunities to enhance the U.S.-Korea bilateral relationship.

``President Bush and President Roh will meet at APEC, and beyond discussing regional security concerns such as North Korea, we hope that our two presidents will take this opportunity to talk about key bilateral commercial issues,’’ he said.

Regarding the future of the Korean economy, he stayed positive but advised Asia’s third largest economy to drive up improvement in every field to cope with rising competition from developing countries.

``I think Korea finds itself in an increasingly competitive position. With a rapidly growing China and the Association of South East Asian Nations (ASEAN), it is important that Korea stay one step ahead of its global competition,’’ he said.

He added Korea needs to ensure that its environment is even better than that of its competitors-more open, more transparent, more flexible, and more welcoming of foreign direct investment. Korea can’t simply meet the competition-it must exceed it.

``In this way Korea will position itself as a regional hub, a goal the U.S.-Korea Business Council supports. If Korea does not take these steps, it could lose out in the race to attract FDI and research and development (R&D), with potential long-term economic ramifications,’’ he said.

jyseo@koreatimes.co.kr

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source: Korea Times