Toughest issues remain in South Korea-U.S. free trade talks
Hankyoreh, Korea
Toughest issues remain in South Korea-U.S. free trade talks
3 September 2006
(Yonhap News, Seoul). Rough sailing is anticipated in free trade agreement talks with the United States that resume in Seattle this week, with rice and other sensitive issues expected to be taken up for the first time, South Korean officials said Sunday.
The Sept. 6-9 negotiations are the third round since the two countries launched FTA talks in Washington in early June with the aim of signing a deal by the end of this year. The second round ended in Seoul in July without progress.
"I’ll fend off U.S. demand to open our market for agricultural products as much as possible," South Korean Trade Minister Kim Hyun-jong said in testimony to a parliamentary committee on Friday.
In Seattle, Kim said, South Korea will keep up its demand for the U.S. to exempt rice and other sensitive products from the FTA or allow them to be open for imports after a long grace period backed by tariffs.
But the U.S. is unlikely to accept the South Korean demand without reciprocal concessions.
Agriculture is one of the weakest sectors for South Korea in the three-month FTA negotiations with the U.S. South Korea is particularly sensitive to rice, the staple food of its 48.8 million people. Korean farmers have often staged violent street protests.
Ahead of the Seattle talks, the U.S. has once again made it clear that there should be no exceptions in the FTA, South Korea’s Foreign Ministry said in a statement on Friday.
In its latest FTA-related letter, the ministry said, the U.S. is asking South Korea to abolish all tariffs imposed on rice, corn, beef and other agricultural products in five stages over the next 10 years.
The United States at the same time is seeking to lengthen the tariff-backed grace period for textile and other sensitive imports from South Korea to up to 10 years, which compares with five years proposed by Seoul.
Currently, South Korea levies an average tariff of 52 percent on agricultural imports, about four times higher than the U.S. level.
Medicine is another pending issue that forced the second round of talks to end a day earlier than scheduled. The U.S. objects to South Korea’s new drug-pricing policy that reimburses patients when they buy medicine approved by their government, a move aimed at offering quality medicine to low-income people at an affordable price.
U.S. officials argue that the so-called Korean "positive list" would discriminate against newly developed American drugs. South Korea so far has refused to back down.
Negotiators are under pressure to conclude the deal before U.S. President George W. Bush’s so-called Trade Promotion Authority expires in July 2007. The authority binds the U.S. Congress to approve or disapprove the deal without debate.
When South Korea ratified its first free trade deal with Chile, it took almost four years since signing an accord.
The U.S. is South Korea’s second largest market after China.
For the U.S., South Korea is its seventh largest market. Two-way trade reached US$72 billion in 2005.
If an FTA is singed with the U.S., South Korea, the world’s 12th largest economy, can expect to boost shipment of electronic and other industrial goods to the world’s biggest market and forge a stronger alliance with Washington.
It will be Washington’s first major FTA since the North American Free Trade Agreement was signed in 1994, comprising the U.S. Canada and Mexico.
Despite many obstacles lying ahead, South Korean officials are confidant of success in the negotiations, particularly encourage by a strong will of their top leaders.
"Concluding the FTA is a huge task for us," the South Korean trade minister, Kim, said in an article contributed to the English-language newspaper Korea Herald on Tuesday, referring to violent anti-FTA protests at home.
"Is the FTA worth all this trouble? Absolutely," Kim said in the article. "If liberalization requires pain and toil, we have to undergo that experience, We owe it to our children." In a television interview aired on Friday, President Roh Moo-hyun stood firmly behind the proposed South Korea-U.S. FTA.
"History shows that there were successful civilizations or failed ones after their markets were opened. But civilizations that had shut themselves out all collapsed," Roh said. "So, we should open ourselves and see whether we’ll succeed or fail."
The reform-minded president said an FTA with the U.S. will make Korean products stronger through fierce competition in the world’s most competitive market.
A key stumbling block is goods South Korean companies make in a joint industrial complex in North Korea’s border city of Kaesong.
Currently, 15 South Korean garment, kitchenware and other labor-intensive companies are operating there, hiring 7,000 North Koreans. When fully expanded by 2012, the park will have several hundred South Korean plants with as many as 750,000 North Koreans, according to Seoul officials.
The U.S. adamantly refuses to recognize the Kaesong products as made-in-South Korea.
"It won’t happen, can’t happen," U.S. Trade Representative Susan Schwab said in an interview with C-Span, a private U.S. cable network specializing in congressional news, when asked about the possibility of Kaesong products to be covered by the FTA.
South Korean officials defend Kaesong as a window for North Korea’s communist regime to learn capitalism and open its closed society, which in turn would help resolve the prolonged international tension over its nuclear and missile programs.
U.S. officials argue that hard-currency earned through Kaesong can be used for the North’s weapons of mass destruction programs.
