logo logo

Nuke test poses minimal impact on KORUS FTA talks

Korea Herald | 2006.10.11

Nuke test poses minimal impact on KORUS FTA talks

By Yoo Soh-jung

North Korea’s alleged nuclear bomb test on Monday will not derail the ongoing free trade agreement talks between South Korea and the United States, experts said today.

"The FTA deals directly with economics rather than politics, so we don’t expect the nuclear test to have a significant negative impact on the negotiations," said an official at the Ministry of Foreign Affairs and Trade, asking not to be identified.

Asia’s third-largest economy is pursuing a trade accord with the economic superpower in the belief that an FTA will bring more economic benefits than losses in the long-term. Both countries are aiming for a win-win agreement.

The government official said that Pyongyang’s nuclear threat could pressure Seoul to speed up a successful conclusion to the trade talks, not only for reasons of national security but also for promoting foreign investment.

Seoul and Washington agreed on Feb. 3 to begin formal talks for a bilateral trade agreement. The first round took place in June, with both countries hoping to conclude the talks by the end of March 2007 to meet the Bush administration’s July 2007 expiration of the Trade Promotion Authority. This body has the power to negotiate trade deals without amendment procedures from the U.S. Congress.

Experts here believe that opening up to the United States gives Seoul the chance to secure stable access to the world’s largest market and advance South Korea’s market system and foreign investment conditions.

But the Seoul government official said that he could not rule out the possibility that "there could be some effect on the trade talks."

"We can’t say outright that there will be absolutely no effect, but the negotiations at this point will take place according to our original plans," the official said.

One glaring issue is Gaeseong, the inter-industrial park located in North Korea. Seoul, up until the previous round of FTA negotiations held last month, said it would not give up trying to persuade Washington to include products made in Gaeseong in their deal.

Seoul wants the goods to be accepted as products made in the South. But Washington is against the proposal, arguing that the free trade deal is between both countries and does not involve a "third party."

Experts stress that the communist state’s nuclear test has now made it virtually impossible for Seoul to realize its ambition of including Gaeseong products in the trade deal.

"The FTA has to do with economic issues, so I don’t expect the nuke test to have a big impact on the overall trade negotiations, but the only obvious problem would be Gaeseong," said Lee Hang-koo, a trade expert at the Korea Institute for Industrial Economics and Trade.

"Seoul would be a fool to bring up Gaeseong again in the negotiations," said Cheong In-kyo, an economics professor at Inha University.

But both Lee and Cheong agree that the threatening incident will strengthen Korea-U.S. ties, and that Seoul will be more eager to seal an FTA at the earliest time possible.

"A trade pact will help Seoul on the security front, as Washington will do its utmost to help ease any shock for U.S. investments and companies in South Korea when a crisis erupts," said Lee.

Seoul’s Trade Ministry said the next round of talks will take place as scheduled from Oct. 23-27 in Korea’s resort island of Jeju. The North Korea threat is not expected to keep U.S. negotiators from coming to the South, the ministry official said.

"The talks will take place according to plan," he said.

 source: Korea Herald