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US trade rep pushes for removal of beef ban, auto tariff

The Hankyoreh, Seoul

U.S. trade rep pushes for removal of beef ban, auto tariff

As FTA talks wind down, S.K., U.S. disagree on several major issues

22 March 2007

Pressure is mounting on South Korea to open several of its markets to the U.S. as free trade negotiations between the two nations are nearing an end.

On March 20, the Trade Subcommittee of the U.S. House Appropriations Committee held a public hearing - the first of its kind - on the proposed Seoul-Washington free trade agreement (FTA), with Deputy U.S. Trade Representative Karan Bhatia on hand. He will lead Washington’s delegation in next-week’s high-level Korea-U.S., talks on the economic pact.

Bhatia called for an abolition of the 8-percent tariff on automobile imports to South Korea, calling this trade barrier quite problematic.

He also said the U.S. will push South Korea to follow international guidelines regarding its current ban of U.S. bone-in beef imports after a mad cow disease outbreak in the U.S. three years ago. Bhatia was referring to the fact that the World Organization for Animal Health is expected to announce in late May that the U.S. is a "controlled risk country" in terms of mad cow disease, technically allowing it to export all "non-specified risk material" beef products, including bone-in beef as well as meat containing skull and spinal matter, parts which pose the greatest risk of transmitting a form of mad cow disease to humans.

Touching on other sensitive trade issues, he stressed that Washington would not take any step backwards in the ongoing trade negotiations with South Korea, including making any concessions toward South Korea’s demands to keep its rice market protected.

Urged by lawmakers, Bhatia said the U.S. will make no concessions in its bid to put in place an investor-state dispute system, which would allow investors to file a suit with an international arbitration body if the other country’s policies inflict damage upon investments. If the U.S. does indeed follow Bhatia’s words to the letter, they will not yield on any hot-button issues in the ongoing FTA talks between Washington and Seoul.

Stephen Biegan, Ford Motor Co.’s vice president, attended the hearing and said that if there is no significant U.S. access to the Korean auto market, the deal should not be accepted. "No manufacturer from any country can [currently] make significant sales into the Korean market," he is quoted as saying by the Detroit Free Press.

Bhatia also noted there is no reason to lift tariffs for South Korean cars imported to the U.S. since about 22 percent of Korean vehicles sold in the U.S. are currently produced there, and this proportion is forecast to increase to 67 percent in three years, citing a U.S. government report.

This increase would essentially mean that the FTA would bear no positive effect for Korean automakers selling in the U.S. Nonetheless, South Korean negotiators are still saying they will compromise in other areas in order to get the U.S. to abolish tariffs on Korean automobile imports, including amendments of certain taxes, including those based on the displacement of cars, as well as environmental and security regulations placed on automobiles.