FTA talks hit snag over trade laws, autos, drugs

Original Publication Date: 
7 December, 2006

BIG SKY, Montana - Korea and the United States hit a deadlock in three of the most sensitive areas in talks for a free trade agreement, raising doubts about meeting a March 2007 deadline in concluding the negotiations.

Korea`s top negotiator, Kim Jong-hoon, said Seoul decided to suspend talks over U.S. trade laws because U.S. negotiators refused to accept Korea`s concessions. Disappointment in this area spilled over to pharmaceuticals and automobiles.

"We decided to come on strongly to the U.S. by halting the talks on trade remedies, pharmaceuticals and autos, because we wanted them to know how serious we are about our position," Kim told reporters.

Seoul particularly wanted to resolve trade remedy issues, such as U.S. antidumping rules, in this round because U.S. negotiators have until the end of December to submit a report to Congress.

Both sides have until March to conclude the talks to meet the July expiration of the Bush administration`s fast-track trade authority. For the Korean government, not securing this FTA with the world`s largest economy would mean a lost opportunity to advance Korean industries and its economy. For the United States, a trade accord with Asia`s third-largest economy would become its largest since the North American Free Trade Agreement took effect in 1994.

Seoul walked out of the trade remedy session after Washington refused to accept Korea`s "reduced" offers on antidumping regulations from 15 to five, Kim said.

The Korean government claims current U.S. antidumping rules discriminate against Korean imports. It says companies particularly in the high-tech industry, such as Samsung Electronics and Hynix Semiconductor, have been unfairly punished.

"We view this as an unreasonable request, particularly given this is one of the most sensitive areas for the United States in the KORUS FTA negotiations," Wendy Cutler, top U.S. negotiator, told reporters.

"We have not said that we are unwilling to discuss these issues, but we have also made it clear that we have very limited flexibility on what we can do in this area," she stressed.

Kim said disappointment over Washington`s refusal to accept Korea`s proposal in the auto sector also led to a standstill. He said his negotiators could have held discussions today but they decided not to because of Washington`s unwillingness to compromise.

According to Cutler, however, the U.S. negotiators thought there was "no need to return to the table today." "We came prepared to meet on the auto issues for the full two days that were scheduled for this group, but it was clear yesterday that the Korean side did not come with new proposals to help us bridge our differences in this important sector," Cutler said.

Korea-U.S. FTA opponents fear that the nation would become an "economic colony," and various industries, such as agriculture, would lose competitiveness from a flood of American goods.

Seoul has been criticized by some domestic media for being pressured by Washington. In reaction, Seoul has sought to turn the tables by adopting a tough line in this round.

Further adding to the chilly atmosphere was Korea`s suspension of negotiations on pharmaceuticals.

"I thought that if the talks for trade remedies were to go well, we would consider continuing talks on auto and for pharmaceuticals," said Kim.

U.S. negotiators continued to push Seoul to reconsider what they say is a "discriminatory policy" on American drugs. The policy dictates that only government-approved drugs are eligible for reimbursement under the national health insurance system.

"As far as I`m concerned, the U.S. clearly knows that Korea is not going to reverse the decision to put into force our new drug-pricing policy," Kim said. "They know that we are willing to adopt other means to ease their fears." Both countries began their fifth round of FTA talks on Monday at a ski resort in Big Sky, pressured to make significant progress in this round. They had originally aimed to conclude the talks by December but extended them to January and now possibly to February. They have until Friday to make progress in other areas, such as agriculture, another sensitive sector.

Despite the snag, both sides remain optimistic about concluding the talks successfully.

"I want to clarify that our decision to suspend the talks is meant to get Washington to seriously reconsider our proposals, and that our action isn`t serious enough for the FTA talks to collapse altogether," Kim stressed.

"Despite the troubling situation, we are determined to press forward, as this continues to be one of my government`s top priorities in the FTA negotiations," Cutler said.