US says state governments ’exempt’ from FTA rules : source
The Hankyoreh, Korea
U.S. says state governments ’exempt’ from FTA rules : source
South Korean market must open fully, however
8 September 2006
The U.S. has reportedly insisted on excluding its state governments from many of the stipulations of the free trade agreement (FTA) currently being negotiated with South Korea.
The U.S. wants to exempt its state governments from obligations under the FTA, sources close to the talks said. The exemptions would be on items such as treating imported South Korean goods in the same manner as domestic products, guaranteeing South Korea and its products "most favored nation" rights, and removing limits South Korea faces in accessing certain markets. Citing technicalities, Washington negotiators demanded Seoul agree to a comprehensive exclusion plan under which most of its 50 state governments would be exempt from the FTA’s requirements.
The two countries are in the middle of their third round of FTA negotiations, this time being held in Seattle. Both sides have failed to narrow their differences in several major areas, but both continue to maintain that a compromise will be hammered out by the end of this year.
U.S. negotiators want state governments excluded from the FTA agreement because they say the federal government’s control on state governments has weakened in recent years, sources said. Experts say this could be a move to limit South Korean procurement projects in the U.S. to federally initiated ones, thus denying South Korean businesses the opportunity to seek deals with state governments. Washington is also insisting that state governments be excluded from negotiations on technology and the environment, a demand which Seoul has rejected.
Experts say that Washington’s insistence is not in line with its stated purpose for an FTA, which is to pursue the complete opening of markets. Under the World Trade Organization (WTO) trade agreement that took effect in 1995, the U.S. opened 37 out of its 50 state governments for procurement bids.
"An FTA is intended to be a step forward from the existing WTO treaties. But the U.S.’s [recent] moves are like taking a step back," a South Korean trade official said.
"We understand that our nations have different legal systems, as the U.S. has federal and state governments...but we cannot yield to all of the U.S.’s demands," said Kim Jong-hoon, South Korea’s top negotiator at the talks.
