Internal memo shows Health Minister obstacle to FTA

Korea Times | 19 October 2006

Internal Memo Shows Health Minister Obstacle to FTA

By Kim Yon-se
Staff Reporter

South Korea tried to cut a deal with the United States to break the stalemate over their bilateral free trade agreement (FTA) talks but an internal dispute nixed the attempt.

According to an internal memo that was circulated among relevant ministries, the deal would have Korea make concessions to the United States for an easier market access by U.S. pharmaceutical companies in return for strengthening requirements for Washington to invoke its anti-dumping measures.

But Seoul fell short of making such an offer in the face of strong opposition by the Ministry of Health and Welfare and didn’t make a formal offer during the third round of talks in Seattle on Sept. 6-9.

In the memo dated Sept. 11, the Ministry of Foreign Affairs and Trade (MOFAT) tried to build an intra-government consensus for allowing market access by U.S. pharmaceutical products, in exchange for U.S. concessions on its anti-dumping requirements, by holding a meeting of economy-related ministers before the Seattle talks.

The document pointed out Health and Welfare Minister Rhyu Si-min as black sheep saying, ``It (the strategic deal) has not fully shaped yet due to health-welfare minister’s opposition.’’

According to sources, however, the Seoul government has finally reached a consensus so as to make a go at this tit-for-tat deal in the upcoming fourth round of talks scheduled for next week at Cheju Island.

There was no case that the U.S. strengthened requirements for executing anti-dumping measures. Instead, the U.S. gave lower-level benefits to Central American countries in its FTAs with them, according to the Korea International Trade Association (KITA).

``Mexico is enjoying exemption of the U.S. Safeguard rules and other Central American countries are enjoying less retaliatory tariffs when they performed dumping, simultaneously with other exporters from other continents,’’ KITA official Chung Jae-hwa said.

An official of the National Health Insurance Corp. said the U.S. is aiming to let domestic medicine manufacturers pay higher royalties to U.S. companies, which hold dominant intellectual property rights, through an FTA. ``Under the scenario, many Korean companies that produce copied drugs will have no choice but to raise prices.’’

At a recent ministry audit by the National Assembly, Rhyu said the government can minimize damages, involving royalties, from the expected 1 trillion won to 350 billion won via the coming talks.

A senior MOFAT official, who asked not to be named, said other sectors, as well as the pharmaceutical sector, could be targets for ``give-and-take’’ in the FTA talks.

A health-welfare ministry official in charge of FTA strategies said he does not know anything about the results of the related ministers’ meeting held before the third round of talks.

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source: Korea Times