Korea Set to Drive Hard Bargain on Shipping, Textiles in FTA
9 March 2006
SEOUL (Yonhap) — South Korea should call on the United States to remove protection for its shipping industry and lower tariffs on textile and clothing imports in order to counter Washington’s demands at the upcoming free trade talks, a state-run think tank said Thursday.
The two nations agreed Monday to hold the first negotiations on a proposed free trade agreement (FTA) in Washington between June 5-9 and a second round of negotiations in Seoul in July, with the aim of sealing a deal by June next year.
In order to have leverage at the talks, Seoul should press the U.S. to stop protecting its shipping firms from foreign competition, the Korea Institute for International Economic Policy said.
“It would be tremendously beneficial for South Korean shippers if they are allowed to compete in the U.S. coastal shipping market,” said Lee Hong-sik, a researcher at the institute.
South Korea should try to secure other concessions if the U.S. does not accept the demand, Lee said.
Under the Jones Act of 1920, the U.S. requires all shipping between U.S. ports to be conducted by U.S.-flagged vessels manned by American crew members.
South Korea should also call on the U.S. to lower high tariffs on foreign textiles and clothing, which are set at relatively higher rates than other imported goods, the researcher said.
The South Korean industry’s weak exports to the U.S. market are attributable to high tariffs, he said, adding lowering tariffs on such items would give domestic companies a competitive edge over Chinese firms. China is now the biggest seller of textile products to the United States.
South Korea is the seventh largest trading partner of the U.S., Seoul’s second-largest trading partner.