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US, Korea inch closer to launch FTA

United Press International

U.S., Korea inch closer to launch FTA


UPI Business Correspondent

26 January 2006

WASHINGTON, Jan. 26 (UPI) — South Korea inched closer to launching a free trade deal with the United States Thursday after it agreed to reduce restrictions of its domestic film screenings a pivotal blockade in launching negotiations.

South Korean Finance and Economic Minister Han Duck-Soo in Seoul announced the government would cut its screen quota in half by July 1 in order to propel free trade negotiations with the United States. The move would end South Korea’s protectionist screen quota system, which currently allows domestic films to be viewed 146 times a year. Under the new quota system, Korean films would be shown only 73 times a year.

"South Korean movies have accounted for about 50 percent of the local market in the past five years and have acquired competitiveness," said Han, in a briefing at the finance ministry in Gwacheon, South Korea. "However, we can’t survive without participating in the global free trade trend since we depend on other economies."

The Korean government indicated plans last year that it would be willing to reduce its screen quotas, a mechanism installed during the 1960s to allow its fledging Korean film industry to survive against competition from Hollywood and other international film industries.

In recent months, however, Seoul has become increasingly primed to launch into negotiations with the United States indicating that it is one of the government’s top priorities.

Economic counselor Chong-Ghee Ang of the South Korean Embassy in Washington explained that the decision by the Korean government to place limits on screen quotas was "not directly linked to our (South Korean government’s) pursuit of FTA negotiations."

"The issue has been there for a long time, but resolving this issue will clearly help in bringing the general atmosphere favorable to the launch of the negotiations," Chong, told United Press International, in a telephone interview.

The Bush administration, which has repeatedly called on South Korea to reduce screen quotas because of its increased competitiveness, said Seoul’s move would help to level the playing field.

"The decision by Korea to liberalize its restrictions on foreign films is good news for Korean movie-goers and the U.S. film industry," said Rob Portman, U.S. Trade Representative, in a released statement. "Now is the right time to give Korean cinemas more flexibility regarding what they can and cannot show."

Talks between Seoul and Washington have been slow due to U.S. concerns over Korea’s screen quotas, ban on U.S. beef exports and intellectual property rights.

Earlier this month, Seoul announced it would lift its two-year ban on U.S. exports of beef, permitting exports of boneless beef from cattle less than 30 months old.

Portman indicated before his departure to Davos, Switzerland to participate in the World Economic Forum that "great progress" had been made between the two trading partners over the last several months on outstanding issues, but that more progress was needed before Washington. could launch into negotiations.

"I’m very encouraged by the talks and I’m very hopeful that we can deepen our economic relationship with Korea through an FTA, but we’re not quite there yet," said Portman.

The United States has indicated plans to announce additional free trade agreements by the end of 2006 and is seeking to expand free trade deals with larger economies, like South Korea, which represents an important growing market in Asia.

Seoul is Washington’s seventh largest trading partner and is the United States fifth largest trading partner in agricultural products. Total bilateral trade amounted to roughly $72 billion.

U.S. and South Korean governments have already held three rounds of pre-FTA meetings in the last two years. While U.S. demands to lift the beef ban on U.S. exports and reduction of screen quotas have been two key U.S. demands, Washington is also seeking to make progress in other areas including automobiles, pharmaceuticals, telecommunications and intellectual property rights.

The United States did not indicate any specific timetable of when negotiations would be launched with South Korea.

"We’ve made a lot of progress," said Neena Moorjani, spokeswoman for the U.S. Trade Representative office. "We hope we can reach a deal."

The Korean government is expected to hold a public hearing next week on Feb. 2, as required under domestic regulations, before any announcements of a launch of negotiations can be made, Chong told UPI. Depending on the outcome of that hearing, the South Korean government may have to take additional steps before it can launch talks with Washington on a free trade pact.