Further Korea-U.S. FTA Talks Likely to Focus on Autos, Agriculture

      November 20, 2009 11:14

      The stalled Korea-U.S. free trade agreement (FTA), concluded in 2007, is getting a push for legislative approval in both countries following the summit between President Lee Myung-bak and U.S. President Barack Obama.

      Adding new momentum to the prospect of ratifying the FTA, Lee suggested that additional talks could help iron out U.S. concerns over the automotive segment of the deal. "If there are any problems in the automobile sector... then we are ready to resolve this issue," Lee said.

      Working-level officials from the two sides could meet before the end of the year for further talks. But negotiations could be tense, as Korea will likely seek to make up for any concessions in the auto sector with reciprocal gains for its agriculture and service sectors.

      ◆ U.S.

      At a joint press conference following the summit, Lee said, "President Obama and I reaffirmed the economic and strategic importance of the Korea-U.S. free trade agreement. We agreed to redouble our efforts to move the agreement forward." Obama said, "And one of my goals is to... make sure that we can create the kind of win-win situation that I know President Lee is interested in seeing, as well."

      The two leaders have virtually agreed on the general outline of the agreement, but some details need to be ironed out. The auto sector remains a sticky issue, as Washington has complained that exports of American automobiles to Korea are far too small compared to shipments of Korean cars to the U.S.

      When the FTA was signed, Korea pledged to scrap its 8 percent tariff on U.S. car imports immediately after it becomes effective so there can be no dissatisfaction on the U.S. side in that area. U.S. officials are instead expected to ask for other conditions in the Korean market to be eased, such as local taxes, environmental and safety standards, and other non-tariff barriers.

      A Korean government official said, "We will decide whether or not to accept U.S. demands after hearing them first."

      ◆ Korea

      Experts believe that if Seoul ends up making concessions on autos then it will seek compensatory measures for the agriculture or service industries. At the press conference Lee indirectly pressured the U.S. by pointing out that the agriculture and service sectors in Korea are still strongly against the deal.

      While the two sides will seek to find common ground on the key issues, it appears there will be no revision of the wording of the deal. A Foreign Ministry official said, "President Lee's comments referring to the agriculture and service sectors were his way of saying that the FTA was beneficial for both countries even though there are individual sectors that are against it." Washington appears to have recently concluded that the bilateral FTA would not be disadvantageous to the U.S. even if it is ratified in its present form.

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