Korea Times, 6 September 2005
U.S. Official criticizes ‘Screen Quota’
By Kim Jae-kyoung, Lee Hyo-sik
The long-standing screen quota issue is a major stumbling block to a comprehensive free trade agreement (FTA) between Korea and the U.S., according to a senior U.S. government official.
Ahead of the APEC Finance Ministers’ meeting on Cheju Island on Sept. 8-9, Robert M. Kimmitt, U.S. Deputy Secretary of Treasury, said in an exclusive written interview with The Korea Times that resolving the screen quota issue is a key precondition to progress in FTA negotiations.
``A key factor in any decision on launching FTA negotiations with Korea will be concrete progress on long standing bilateral trade issues,’’ Kimmitt said. ``Before we can agree to launch a comprehensive and high-standard FTA with Korea, we need to do everything we can to ensure that an FTA would be successful.’’
``For example, how can we negotiate difficult FTA policies if we cannot resolve the long standing screen-quota issue?’’ he questioned.
He pointed out that significant progress on screen quotas and other long standing trade issues, including beef, autos and pharmaceuticals, would show that Korea is ready to make the difficult but necessary political decisions needed to negotiate an FTA.
Korea and the U.S. have yet to start formal talks on an FTA, though they have held several rounds of working-level meetings exploring its feasibility.
The two countries are divided over several issues, such as Seoul’s screen quota system and Seoul’s ban on U.S. beef that has been in effect since December 2003.
``A U.S.-Korea FTA could provide significant economic benefits for both countries through improved market access and growth in trade and investment,’’ he stressed.
Touching on the Korean economy, Kimmitt said that the country has dealt aggressively with financial sector problems and non-performing loans that developed as a result of the 1997 Asia crisis.
``Korea has maintained and advanced its program of economic liberalization after the crisis, and has been rewarded with healthy and sustained economic growth,’’ he added.
Kimmitt, who highly regards Korea’s independent monetary authority, which has built a credible inflation-targeting regime, added that increased flexibility in the nation’s foreign exchange regime will be helpful in maintaining a sound interest rate policy.
He said the U.S. also welcomes China’s announcement to adopt a more flexible exchange rate regime, as reform of China’s currency regime is important for both China and the international financial system.
``We will continue to monitor China’s managed float as their exchange rate moves to alignment with underlying market conditions,’’ Kimmitt said, adding that the full implementation of China’s new currency regime will be a significant contribution toward global financial stability.
In response to international community’s concerns over growing U.S. twin deficits, Kimmitt said that the world’s largest economy is doing its best to address imbalances by aggressively tackling its fiscal deficit.
``Because of strong growth and an appropriate fiscal policy, we have seen significant improvement in the U.S. budget deficit. We will pursue this path of deficit reduction by continuing President Bush’s agenda of pro-growth policies and responsible spending restraint,’’ he said.
In order to reduce the trade account deficit with major trading partners, Kimmitt said that U.S. actions alone would not be sufficient to unwind global imbalances.
``Large imbalances will continue if growth in our major trading partners continues to lag. These economies must continue to adopt and implement vigorous and necessary structural reforms to establish robust rates of growth for their own economies and to contribute to reducing global imbalances,’’ he stressed.
In an assessment of the current state of the U.S. economy, Kimmitt said that the economy is strong and growing stronger, boosted by well-timed tax cuts combined with sound monetary policy set by the Federal Reserve Board.
``The growth has been solid as the gross domestic product has increased at a rate above three percent for the past nine consecutive quarters,’’ he said, adding that more Americans are working today than ever before, with more than 4 million new jobs have been created since May of 2003.