S. Korea-U.S. FTA talks hit new snag, but prospects remain hopeful
South Korea on Wednesday temporarily suspended parts of its slow-moving free trade talks with the U.S. after Washington refused to address its demand over trade remedies.
However, the South Korean move was not expected to endanger the six-month-old free trade agreement (FTA) negotiations themselves, both sides said.
So far, no clear breakthroughs have been made. The current round in this U.S. state of Montana is the fifth in its series, and at least one more round is scheduled for January.
South Korean officials came to Montana, saying they would focus on changing or easing U.S. anti-dumping rules that they believe have been used unfairly against their exports. The U.S. rejected the Korean demand, citing complex congressional procedures.
As a protest on Wednesday, South Korean delegates pulled out of one committee handling trade remedies as well two others negotiating tariff and other issues related to automobiles and pharmaceuticals.
South Korean officials said there will no further discussions on the three subjects in this week’s round which will continue until Friday. Fourteen other committees were held on Wednesday, as scheduled.
Kim Jong-hoon, the chief South Korean negotiator, acknowledged that his decision to suspend the three committees was part of his “pressure strategy.” “In fact, this fifth round is the final stage for us to officially express our stance within this year,” Kim told reporters. “So, our strategy wasn’t aimed at putting the next sixth round in danger.” Wendy Cutler, the chief U.S. delegate, said her delegation would further study the Korean demand after the Montana round.
“When we return from Montana, we will look closely at the proposals submitted to us by the Koreans, as we prepare our report to Congress, which will be submitted by the end of this year,” she said.
Cutler said, however, that she has “very limited flexibility” on the South Korean demand.
Despite the pitfall, Cutler said she still was hopeful that the envisioned deal could be clinched by March as planned.
“It’s true we have hit a snag in a couple of key areas, but it is not unusual in FTA negotiations, particularly in the most sensitive issues,” she said. “The big picture that we should keep in mind is that there are 14 other groups meeting this week and they are making steady progress.”
Both sides confirmed that negotiations on less sensitive areas such as services, investment and intellectual property rights will continue uninterrupted in Montana.
Under a proposed FTA, Seoul wants Washington to restrict the imposition of its tough anti-dumping rules on South Korean imports.
The issue is a matter of particular concern to South Korea who believes that many of its global businesses, such as Samsung Electronics Co., have been unfairly punished by U.S. anti-dumping regulations.
The U.S. is South Korea’s largest export market, with US$40 billion sold there in 2005. Most South Korean exports to the U.S. are high-tech goods such as semiconductors, autos, plasma televisions and mobile phones.
South Korea specifically is asking the U.S. to give it prior notice when it begins an anti-dumping probe under the envisioned FTA. It also wants preferential U.S. treatment when a South Korean company is investigated by the U.S. trade regulators along with companies from other nations.
South Korean Trade Minister Kim Hyun-chong, now in Washington, may fine-tune the matter of trade remedies with higher U.S. government and Congressional leaders, South Korean officials said.
Adding to the tension was Seoul’s rejection this week of U.S. beef shipment for the third time in a month after bone fragments were found in the meat in violation of an agreement, under which South Korea resumed imports after banning them for three years, because of an outbreak of mad cow disease in the U.S. in 2003. South Korea lifted the ban on the condition that it import only boneless meat.
Cutler said she was “very disappointed” with the Korean decision.
“This is not a commercially viable way in trade of the two major trading partners,” she said. “It seems that we are moving backward on the beef issue rather than forward.” Time is running out, because U.S. President George W. Bush’s “fast-track” trade promotion authority expires on June 30. The authority requires a 90-day review of a deal by Congress before voting on it without any amendments.
If successful, a free trade pact would phase out tariffs on most goods between the two economic powerhouses, which chalked up US$72 billion in 2005 trade. For the U.S., it would be the biggest commercial deal since the North American Free Trade Agreement was put into effect in 1994.
Big Sky Resort, Montana, Dec. 6 (Yonhap News)