S. Korea issues free trade deal warning
Business Week
S. Korea issues free trade deal warning
By Kelly Olsen
BW Exclusives
26 March 2007
SEOUL. South Korea warned Monday that negotiations to reach a free trade agreement with the United States under a deadline just days away could fail if Washington pushes to include rice in the deal.
"The negotiations may collapse if the FTA fails to meet our expectations or the U.S. demands rice concessions, which our side cannot accept," Kim Jong-hoon, Seoul’s chief negotiator, told reporters as the two sides began a round of high-level talks aimed at clinching a deal. "We made it clear we will deal resolutely with such a situation."
Seoul and Washington need to wrap up an agreement by March 31 due to various legal requirements related to the approaching end on July 1 of U.S. President George W. Bush’s Trade Promotion Authority, which allows him to send trade agreements to Congress for straight yes-or-no votes without amendments.
The tight schedule has forced the two sides to turn the talks over to higher-ranking officials after Kim and his U.S. counterpart, Assistant U.S. Trade Representative Wendy Cutler, failed to reach an agreement in talks last week in Washington.
Their bosses, South Korean Trade Minister Kim Hyun-chong and Deputy U.S. Trade Representative Karan Bhatia, opened the latest effort earlier Monday.
"We had meetings pretty much nonstop since this morning," said Bhatia, who refused to reveal details or offer a progress report. Kim Hyun-chong did not speak to reporters.
South Korea, the world’s 10th-largest economy, has said since even before the negotiations formally began in June last year that it would demand that its rice market, which it considers a "sensitive sector," be excluded from any final deal.
Chief negotiator Kim Jong-hoon, a dapper South Korean trade diplomat with the rank of ambassador, described the talks Monday as taking place in a "serious and tense" atmosphere.
He also reiterated Seoul’s demand that goods manufactured at a joint industrial zone it backs in North Korea be included in the deal, a stance Washington has said it will not accept.
Besides agriculture, other contentious issues remaining to be solved include trade in automobiles, in which the United States is in sizable deficit.
U.S. manufacturers sold 5,795 vehicles in South Korea in 2005, while South Korean makers such as Hyundai Motor Co. and Kia Motors Corp. sold 730,863 vehicles in the United States, according to Commerce Department figures.
South Korea is the seventh-largest trading partner of the United States, and the two countries do more than US$75 billion (euro56 billion) in trade a year.
If successful, the deal would be the biggest for Washington since the North American Free Trade Agreement in 1993.
The two governments say a deal to cut tariffs and other barriers would increase trade and boost economic growth. Opponents in South Korea fear an influx of cheaper U.S. goods would harm livelihoods and cost jobs.
About 100 demonstrators rallied Monday outside the venue for the talks — a luxury hilltop hotel — and accused South Korean leaders of betraying the national interest.
"The free trade negotiators are just like those who sold out Korea to the Japanese 100 years ago," said veteran activist Oh Jong-ryul.
Japan ruled the Korean peninsula as a colony in 1910-1945, and the issue of Koreans who collaborated with the Japanese remains contentious in South Korea.
On Sunday, 7,000 people took to the streets of Seoul to denounce the proposed deal, culminating in a rally in front of the U.S. Embassy.
Associated Press Writer Kwang-Tae Kim and AP photographer Jin-Man Lee contributed to this report.
