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KORUS FTA concessions part of MB’s U.S.-centered strategy, analysts say

The Hankyoreh, Seoul

KORUS FTA concessions part of MB’s U.S.-centered strategy, analysts say

Lee administration figures also say that the KORUS FTA is about the U.S. alliance as much as economic considerations

By Jung Eun-joo and Hwang Joon-bum 

5 December 2010


In their South Korea-U.S. Free Trade Agreement (KORUS FTA) renegotiations, South Korea and the United States agreed to draft and submit an additional accord to their respective legislative bodies that includes full-scale revisions to the auto provisions of the previous agreement formally signed in 2007. The accord includes provisions demanded by the United States including an extension of the deadline for automobile tariff abolition, the introduction of a special safeguard, and the relaxation of South Korean safety standards and environmental regulations for U.S. automobiles.

The Lee Myung-bak administration appears unlikely to avoid charges that it conducted “giveaway negotiations” one-sidedly favoring the United States both in content and procedure.

Critics have stated that the auto sector, which the Lee administration had proclaimed a major success at the time of the original agreement’s signing in 2007, ended up the subject of major concessions to the United States, while South Korea’s gains in other sectors such as agricultural were very minor. The Washington Post called the outcome of the renegotiations a “victory for the U.S. president.”

Even those within the Lee administration have acknowledged that there were concessions in the automobile sector. The U.S. government is to maintain a 2.5 percent tariff on Korean automobile imports for four years after the agreement takes effect before abolishing it, while the South Korean government is to immediately lower its automobile tariff from its current 8 percent to 4 percent on the day the agreement takes effect and maintain that rate for four years before abolishing it. This represents a four-year extension of the abolition deadline from the 2007 agreement, where tariffs were to be immediately abolished for South Korean automobiles with displacement under 3000cc.

The inclusion of a special safeguard not included in the 2007 agreement presents particular potential for controversy. According to this safeguard, the U.S. can unilaterally impose import restriction measures on Korean cars for ten years, even after tariff abolition, if the U.S. automobile industry suffers major damage because of a marked increase in Korean exports.

During the renegotiation process, the Lee administration maintained a consistent stance of complete disregard for the assessing domestic opinion from citizens and impacted industries and examination of feasibility.

Lee administration trade authorities shut the National Assembly out of the process completely, violating a prescription on FTA signing procedures that requires reports to parliament on the progress of the negotiations. In particular, the collapse of the balance of interests was a foreseen outcome. In a statement issued following the signing of the renegotiated accord, Obama called the outcome a “landmark deal” and predicted that the accord would increase U.S. exports by around $11 billion dollars and create more than 70 thousand jobs.

Within the Cheong Wa Dae (the presidential office in South Korea or Blue House), observers were predicting a rocky road ahead Sunday for the accord’s ratification in the National Assembly. However, analysts say President Lee Myung-bak’s insistence on signing the renegotiated accord within the year is an inevitable result of the administration’s one-sided diplomacy, which has placed top foreign affairs priority on the alliance with the U.S. since it arrived in office.

According to these analysts, the Lee administration was obliged to accede to U.S. demands for FTA renegotiations following increased dependence on the country owing to a combination of factors in inter-Korean relations and domestic political considerations.

This was evidenced by the way the recent renegotiations followed the agenda and timetable set by the U.S.

Obama, who had increasingly applied pressure for FTA renegotiation since taking office in January 2009, focused heavily on the issue during a summit meeting with President Lee at the Cheong Wa Dae in November of that year. At the time, President Lee made the renegotiation issue official for the first time, saying, “If there is a problem in the auto sector, I am prepared to talk again.”

Then, at another summit meeting in Toronto in June 2010, the two leaders set a firm deadline, agreeing to adjust the FTA by November according to the U.S. demands. This was the same meeting where the reversion of wartime operational command to South Korea was discussed. Lee and Obama agreed to delay the date of the reversion from Apr. 17, 2012, to Dec. 1, 2015. In response to Lee’s expression of appreciation, Obama brought out the card of the renegotiation deadline. At a Nov. 11 summit meeting at the Cheong Wa Dae, they agreed to finalize the discussions “within the next few weeks,” and the final renegotiated accord was signed on Dec. 3.

Throughout the process, Seoul has consistently emphasized the “South Korea-U.S. alliance.” Things got off on the wrong foot in April 2008, just after the Lee administration took office, when the president expressed pessimism abut the possibility of the FTA’s ratification by the United States and agreed to fully open the market for U.S. beef imports as a preliminary condition. He later backed down and restrict imports to cattle aged under thirty months in the face of nationwide protest in the form of the candlelight vigil demonstrations of 2008. In the process, Seoul overturned its agreement with the U.S. from the very first year and wound up in the country’s debt.

The Lee administration went on to note the major assistance provided by the U.S. in South Korea’s gaining the status of G-20 member country and host of the G-20 summit in Seoul. The same was said for the decision to select South Korea as host for the second Nuclear Security Summit in 2012. The Lee administration pointed to these international meetings as major accomplishments.

South Korean dependence on the U.S. increased sharply as relations with Pyongyang deteriorated. Following the sinking of the Cheonan in March, close-knit coordination with Washington provided support for Seoul as it stepped up sanctions against North Korea and conducted joint military exercises with the United States. On the strength of conservative public opinion heightened by the Cheonan situation, the Lee administration delayed the deadline for the reversion of wartime operational control to South Korea by three years and seven months from April 2012 to December 2015.

Moreover, with the North Korean artillery assault on Yeonpyeong Island occurring during the FTA renegotiation process, observers expressed concern that Seoul’s bargaining ability would diminish amid a high level of reliance on the United States. in areas such as military and intelligence abilities and international coordination.

Cheong Wa Dae Senior Secretary for Public Affairs Hong Sang-pyo said the renegotiations “were founded in economic logic, without any connection to issues like the Yeonpyeong Island artillery attack.”

However, key officials in the Lee administration argued early on that the KORUS FTA should be viewed in terms of the alliance with the United States in addition to economic terms, and that the situation of domestic difficulties faced by Obama should not be ignored. For President Lee, this means getting caught in an “alliance mire” where he is obliged to accede to demands from Washington even if it means facing a firestorm at home.