US draws distinct lines on what Congress will reject in Korea FTA
2006/06/16
U.S. draws distinct lines on what Congress will reject in Korea FTA
By Lee Dong-min
WASHINGTON, June 15 (Yonhap) — A senior U.S. senator drew clear lines Wednesday on what the Congress will not accept in a free trade agreement (FTA) with South Korea, including imports from an industrial complex inside North Korea.
South Korean Ambassador to Washington Lee Tae-sik responded that the agreement should reflect the "balanced interest" of both countries with "respect" for each other’s positions.
Following up on the first formal FTA negotiations held here last week, Sen. Max Baucus (D-Montana) and Lee went over point by point where they stood on the trade pact that, if concluded successfully, would be the largest since NAFTA went into effect in 1994.
One of the points of contention is the Kaesong Industrial Complex, a special zone in North Korea where South Korean companies have set up manufacturing lines using the North’s cheap labor.
Seoul wants the FTA to include products from Kaesong as well, to be exported as "Made in Korea." Both the U.S. administration and the Congress have so far reacted negatively, unwilling to accept products made in a country noted for rampant human rights violations and nuclear ambitions.
"We must be very candid," Baucus said at the FTA discussion with Lee.
It is understandably important for Seoul, he said. "This issue alone, however, has the potential to sink the U.S.-Korea FTA."
"We already have many difficult and politically sensitive issues to deal with in these negotiations... The parties should not add issues like Kaesong that would overwhelm what can otherwise be a popular deal," he said.
The Kaesong issue should be seen within the context of North Korea’s nuclear ambitions and the regime, he said.
The senator, a ranking member of the Senate Finance Committee, also clearly opposed any attempt to negotiate U.S. trade remedies, one of the demands Seoul is pushing hard.
"The administration may not enter into agreements that ’lessen the effectiveness’ of U.S. trade remedy laws, whether they are anti-dumping, countervailing duty, or safeguard laws," Baucus said.
"I can assure you that Congress will tolerate no deviation from them."
On other issues, the senator pressed Seoul to resume imports of U.S. beef, remove barriers to American auto exports, and increase transparency in its pharmaceutical policies.
Negotiators have set an ambitious deadline in drafting the FTA, hoping to wrap up negotiations by end of the year to give their legislative bodies required review time for passage before the U.S. trade promotion authority (TPA) expires at the end of June next year.
The TPA, also known as the fast track authority, requires the Congress to vote up or down on the FTA without seeking amendments.
Both sides have sensitive issues, namely the agricultural market for South Korea and textiles for the U.S.
"There are two crucial points that both sides should bear in mind in order to achieve our ambitious goal: balance of interest and a reality check," Lee said.
South Korea will adhere to two guidelines, he said: "First, that the results of the negotiations should reflect both sides’ interests in a balanced way, and second, to respect each other’s positions on sensitive issues."
Conceding that he understands Baucus’ views on Kaesong, the envoy said inter-Korean reconciliation and cooperation are important for South Korea.
"We will continue to discuss specific issues," he said.
The envoy countered the senator’s points on the automobile and pharmaceutical sectors, explaining domestic needs and policies.
Auto tariff reductions, for instance, are the result of South Korea’s energy-saving and environmental protection policies and also a major income source for local governments, Lee said.
The pharmaceutical pricing reforms recently announced are intended to improve the financial soundness of the country’s national health insurance program, not to discriminate against foreign companies, he said.
On agriculture, South Korea will be looking for different tariff schedules on each product, he said.
The ambassador took the offensive on South Korea’s demands.
"Korea has high expectations on the textile sector. Our goal is to achieve a wider opening of the U.S. textile market," he said, referring to high U.S. tariff rates in this particular sector.
"We have a great interest in starting discussions regarding anti-dumping regulations with the U.S.," said Lee. "Too many times, Korea has experienced difficulties in its trade relationship with the U.S. due to its anti-dumping measures."
Dennis Halpin, a staff member with the House Committee on International Relations, drew a bleak view of how the FTA will be received by the next Congress after the November elections.
"I would say probably the FTA has no better than 50 percent chance of passing the House," he said at a briefing session hosted by the South Korean embassy.
Polls indicate the Democrats are likely to win the House, where only 15 of more than 200 Democrats last year voted in favor of the Central American Free Trade Agreement (CAFTA).
"There should be concern about any FTAs," said the congressional aide, an East Asian affairs specialist.
He, too, was negative about including Kaesong in the agreement but for different reasons for Democrats and Republicans.
"The unions will go to the Democrats and say they (South Korea) are paying low wages to these (North Korean) workers. They are undercutting our workers," Halpin said.
For Republicans, the issue will be more about Pyongyang’s illicit activities, such as counterfeiting of American dollars, according to the aide.
"How can you expect the American economy and the American people to accept goods from a country that is still counterfeiting our currency?" Halpin said.
"I would say that if Kaesong is in the FTA, it’s dead on arrival in the House."
