Prospects for Korea-US free trade agreement
Korea Times | 19 December 2004
Prospects for Korea-US Free Trade Agreement
By Kim Sukhan
With the recent re-election of George W. Bush, I thought it would be timely to discuss one of President Bush’s top trade priorities for his second term in office in which Korea has a great level of interest: free trade agreements (FTAs). FTAs were already a major focus of the first four years of his administration, during which time Bush concluded bilateral FTAs with Chile, Singapore, Australia, the Dominican Republic, Morocco and Bahrain. The Bush Administration also negotiated an agreement with five countries from Central America, which is awaiting final Congressional approval. Building upon these efforts, Bush has stated that the establishment of FTAs with other countries around the world will continue to be a top priority during the next four years of his administration.
In furtherance of this goal, the president has launched negotiations with Thailand, South Africa, countries of the Andean region and, most recently, Oman and the United Arab Emirates. Korea, however, is not currently among those countries with which a second-term Bush Administration is actively pursuing an FTA. While there have been suggestions that the administration may consider an FTA with Korea, any such agreement would be an uphill battle for several reasons.
First, before committing to formal negotiations, the Bush Administration would expect Korea to make progress on a range of trade issues. The United States Trade Representative (USTR), Robert Zoellick, articulated this position by stating recently that Korea needs to "lay the foundation" for an FTA by showing a "clear signal" that it is ready to negotiate difficult trade issues by addressing certain trade concerns. For example, the administration would like Korea to strengthen its legal framework for the protection of intellectual property. The administration is concerned with copyright infringement, counterfeit merchandise, a failure to safeguard confidential business information, as well as the growth of online music piracy and continued piracy of U.S. motion pictures. A decision by the USTR in January 2004 to elevate Korea from the Special 301 Watch List to the Priority Watch list reflects the serious concerns of the U.S. government regarding this issue. In addition, the administration’s concerns also include Korea’s agricultural trade barriers, quotas on film and television programming, certain taxes on automobiles that U.S. manufacturers claim places them at an unfair disadvantage and telecommunications policies that allegedly discriminate against U.S. competitors. Absent any concrete progress on some or all of these issues, U.S. policymakers will be reluctant to begin formal negotiations.
Second, the Bush at this time does not consider a bilateral agreement with Korea to be a priority on his trade agenda. During his second term, the president will work hard to complete the World Trade Organization’s Doha Round and the Free Trade Area of the Americas (FTAA). Achieving this objective will require substantial technical and political resources that may dissuade the Bush Administration from entering into other potentially controversial trade negotiations, such as an agreement with Korea. Moreover, the Bush Administration has in many cases pursued bilateral agreements that promote broader foreign policy or national security objectives, notwithstanding a minimal economic benefit for the U.S. For example, Bush has pledged to expand the number of bilateral trade agreements with countries in the Middle East to strengthen moderate governments in that region. The administration has also pursued a number of bilateral agreements with countries of Central and South America in large part to provide momentum for the FTAA. It is not clear, however, that Bush or his senior advisors consider a bilateral agreement with Korea to be an important goal to advance national security or foreign policy objectives. When combined with the unresolved differences between Korea and the U.S. with regard to the above trade issues, this lack of a clear national security or foreign policy objective tied to the agreement will further weaken its prospects.
Third, the agreement at this time lacks strong support from domestic constituencies in the U.S. This support is necessary to ensure that the USTR and other relevant agencies expend some of their limited resources to advance the negotiations. Most importantly, the U.S. business community has not moved to organize an effective campaign to promote the agreement. In addition, while Korea has many supporters in Congress who understand the critical importance of the bilateral relationship, no influential champions have emerged who are prepared to promote the agreement as critical to U.S. national security and economic interests. Without this organized support, prospects for formal negotiations will remain weak.
Finally, at a general level, in evaluating whether to initiate FTA negotiations, the Bush Administration has considered six factors, including a country’s readiness in terms of trade capabilities, the economic benefits to the U.S., the country’s support for U.S. trade liberalization policies, U.S. foreign policy considerations, the extent of Congressional and private sector support and U.S. government resource considerations. Many senior U.S. government officials simply believe that, when measured against these factors, an FTA with Korea is premature at this time.
Despite these many challenges, there is still some room for optimism that the U.S. and Korea may make progress toward a trade agreement at some point in the near future. Korea’s advanced economy as well as its strong alliance and growing commercial relationship with the U.S. provide a strong foundation for a future trade agreement between the two countries. U.S. Ambassador to Korea Christopher Hill for example, stated recently that he hopes an agreement is completed during his tenure. Moreover, a major U.S. business association, the National Association of Manufacturers, has also described Korea as a "pretty strong contender" for a future trade agreement. Nevertheless, such optimism must be accompanied by a concerted effort by Korea and other proponents of an FTA for any hopes of one to truly materialize.
** Kim Suhkan is a senior partner at the law firm of Akin, Gump, Strauss, Hauer & Feld in Washington, D.C.
