Hankyoreh, Seoul, July 13, 2006
U.S. boycotts discussions on medicines in FTA talks with S. Korea
Negotiators from the United States have boycotted discussions on medicines in free trade talks with South Korea, in an apparent protest against Seoul’s new drug-pricing move, Seoul’s chief negotiator to the talks said Thursday.
As the second round of free trade talks between South Korea and the U.S. went into their penultimate day, both sides had failed to narrow gaps on sensitive items despite some progress on minor issues.
"The session on pharmaceuticals has been suspended from Tuesday as U.S. (officials) claimed U.S. pharmaceutical companies could face a disadvantage from our new drug-pricing policy," Kim Jong-hoon said in a press briefing. "The U.S. has just informed us of the cancellation of the session and both sides have failed to narrow the gap so far." It was unclear whether the pharmaceutical session, one of 18 sessions in the second round of free trade talks that began Monday, will be held, South Korean delegates said.
Failure to come up with an outline of an agreement on pharmaceuticals is increasing the difficulty of making progress during the second round of negotiations between South Korea and the U.S., they said.
From the first round of talks in early June, the U.S. has expressed concerns about the South Korean Health Ministry’s plan to reimburse patients when they buy medicines approved by the ministry.
U.S. pharmaceutical companies, whose medicines are not yet on the government’s "positive list," can’t be reimbursed, experts said.
Heading into the second talks on Monday, the top U.S. negotiator Wendy Cutler told reporters, "We don’t believe this proposed change in the Korean system towards a positive list will achieve the objective that Korea has stated for itself on this sector." "We believe the proposed positive list system will end up discriminating against and limit access of Korean patients and doctors to most innovative drugs in the world," she said.
For months, U.S. pharmaceutical companies here have protested against the South Korean government’s move in readjusting prices, aimed at offering quality medicines to the low-income class for an affordable price.
If the new policy goes into effect from September, many U.S. pharmaceutical companies will face a steep drop in their sales, experts said.
"We believe that in an advanced country like Korea, people should have the right to access to advanced medications," said Rob Smith, an executive of global pharmaceutical company Eli Lilly’s Korean unit, in a statement posted on a Web site of the Korea Research-based Pharmaceutical Industry Association, a lobbying group for western medicine companies.
"We are concerned that the targeting these advanced medications for reduced access does not best serve the interests of Korean patients," the executive said.
During the Thursday briefing. Seoul’s chief negotiator Kim also reiterated his government’s pledge to exclude rice from the free trade talks with the U.S.
"I don’t think rice is subject to bargaining in terms of tariffs and (import) volumes," Kim said. It is the first time that Kim publicly commented about rice, one of the most sensitive items in the talks.
Excluding rice, both nations agreed to exchange tariff concessions on agriculture and textiles in the middle of next month ahead of a planned third round of talks in September, Kim said.
However, Kim’s stance on rice was contradictory to a remark by his U.S. counterpart Cutler. On Monday, Cutler said, "We are fully aware that this is very sensitive issue for Korea, nevertheless, it’s no secret that we will seek rice market access under this negotiations." South Korea and the U.S. launched formal talks of a possible free trade accord in Washington in early June, hoping to sign a formal deal by the year’s end so the U.S. Congress can ratify the pact before U.S. President George W. Bush’s so-called Trade Promotion Authority (TPA) expires in mid-2007.
This special authority allows the Bush administration to negotiate a free trade pact without Congress having to approve amendments. For the U.S., a deal with South Korea would be the biggest trade pact since the North American Free Trade Agreement in 1994.
South Korea is the world’s 11th-largest economy and the U.S.’ seventh-biggest trading partner. Two-way trade amounted to US$72 billion last year, with South Korea posting a surplus of $16 billion, according to South Korean government data.
The U.S., whose economy is more than 17 times bigger than that of South Korea, is demanding South Korea reduce trade barriers on its automobile, agriculture and pharmaceutical markets, among others.
South Korean farmers and low-income factory workers vow to block the proposed trade pact, arguing that the deal, if signed, would threaten their livelihoods.
On Wednesday, about 25,000 farmers, workers and students gathered in central Seoul amid torrential rain to stage demonstrations against the potential free trade agreement.
Scuffles and clashes erupted, but no serious injuries were reported.
The Korean Alliance Against Korea-U.S. FTA, which is organizing rallies against free trade talks, said on its Web site that about 3,000 farmers and workers were due to hold demonstrations, including a "mock funeral of the possible free trade accord" between the two nations.
Separately, some 1,800 journalists and 600 dentists plan to stage demonstrations in other parts of Seoul, joining the alliance’s move, organizers said.
About 5,300 riot police were deployed in areas of central Seoul as thousands of people plan to demonstrate against the talks during the day, according to the Seoul Metropolitan Police Agency.
Despite growing pessimism on the talks, Cutler said on Monday, "I remain optimistic about the prospects for our success for a Korea-U.S. FTA ... I don’t envision any deal breakers." Seoul and Washington set no official deadline for the free trade talks, and the two sides are scheduled to hold further negotiations in September, October and December.