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November 21, 2009
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| The ratification impasse over the Korea-U.S. free trade agreement faced a new turning point following President Lee Myung-bak’s remarks this week that his government is willing to talk about the automobile provisions in the pact. Dismissing media speculation that the free trade agreement, signed in 2007, will be renegotiated, a Foreign Affairs and Trade Ministry official said such an attempt would amount to opening up a Pandora’s Box. In a media conference on Thursday following his summit with U.S. President Barack Obama, Lee said he was aware of the automobile issue and his government is willing to talk about the concerns. “In Korea, those in the service and agricultural industries oppose the FTA, but we are pushing it forward because it will benefit bilateral trade,” Lee said. “If the automobiles are a problem, we are willing to talk about it. The European Union is a major automaker, but we’d signed an FTA with them.” The Korea-U.S. free trade agreement was signed by previous Korean and American administrations. The last step to liberalize trade between the countries is ratification by their respective legislatures. U.S. automobile lobbying groups have expressed dissatisfaction over the deal, complaining that the Korean market was not open enough to them. In contrast, the agreement has been criticized by farmers and service industry workers in Korea. Lee’s remarks were a carefully calculated move taking into account the political timetable of the United States, including the midterm election next November, a senior Blue House official said yesterday. “Starting next summer, the midterm election will dominate the U.S. political arena,” the high-ranking foreign affairs aide to Lee said. “The U.S. Congress will be preoccupied with the country’s automobile industry’s gains and American job issues, and voices will grow against the ratification of the Korea-U.S. free trade agreement.” The official also explained that no progress is expected to be made once the campaign starts, and it was necessary for Korea to prompt active participation of the U.S. Congress and administration. Lee’s remark on the auto industry was intended to serve as a catalyst for such a development, the official said. The Blue House official also added that during the summit, Lee suggested to Obama that they work together to achieve the ratifications by both countries’ legislatures before the end of next year’s first half, and that is also based on the U.S. political timetable. The Blue House, however, made it clear again that Lee’s remarks did not mean a renegotiation of the agreement. “There is no change in the position that the agreement, already signed by both parties, will not be changed,” said Kim Eun-hye, Lee’s spokeswoman. “What he meant is that if the United States provides specific positions on the automobile issue, Korea will review the matter.” Foreign Minister Yu Myung-hwan also reiterated the position. “It’s not about renegotiation or additional negotiations,” Yu told the National Assembly’s foreign affairs and trade committee. “The United States has not officially told us what the specific complaints regarding the automobile issue are. So, our position is let’s just hear about them.” The U.S. demands are expected to be revealed when the Office of the United States Trade Representative delivers its package of recommendations by the end of this year or early next year. While Washington complains about the auto provisions, it has not specifically said what’s unsatisfactory. “That can also be a negotiation tactic,” said Suh Jin-kyo, director of planning and research coordination at the Korea Institute for International Economic Policy. U.S. auto importers in Korea also said they were ordered by their American headquarters to not comment to the media because the auto provisions in the FTA have become a subject of political negotiation. What will likely be included in the USTR’s demands? The trade office argued in a congressional report in March that non-tariff barriers were the main problem. Last year, U.S. automakers sold 6,980 cars in Korea, comprising less than 1 percent of the country’s passenger vehicle market. The U.S. trade office also complained that the ban on two-wheeled vehicles on Korea’s highways is also an obstacle. Korea’s auto industry reacted that the issue is the low competitiveness of the American cars, referring to the steady sales of European and Japanese cars. Even if the non-tariff barriers were eased at the U.S.’s demand, European and Japanese automakers, not the American carmakers, will actually benefit from it, auto industry insiders said. Other experts said the U.S. auto industry is actually more interested in its domestic market. The United States may attempt to delay the Korean cars’ tariff cut, concerned that Korean carmakers will further dominate the compact car market. Such a change, however, is touching the key principle of trade liberalization, and Korea could likely demand changes in agricultural and service sectors, prompting a massive renegotiation. “If renegotiation takes place, it is very unlikely that the two sides will find a compromise,” said Suh. Concluding the deal was extremely difficult to begin with. The two sides began talks in February 2006 and the negotiations took 16 months. By Suh Kyong-ho, Ser Myo-ja [myoja@joongang.co.kr] |
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