[A2k] Bridges Weekly: US-KOREA FTA TALKS END EARLY AMIDST DISAGREEMENT

[Thiru Balasubramaniam]

http://www.ictsd.org/weekly/06-07-26/inbrief.htm#1

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BRIDGES Weekly Trade News Digest - Vol. 10, Number 27 26 July 2006


In Brief
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US-KOREA FTA TALKS END EARLY AMIDST DISAGREEMENT

Free trade agreement (FTA) negotiations between the US and Korea were
called off ahead of schedule on 14 July, the day after US officials
boycotted sessions on trade remedies and services in response to
disagreements on several issues, particularly pharmaceuticals.

Korea's planned reform of a government programme for pharmaceutical
reimbursements has emerged as one of the principal sticking points in
the talks. The regulations for the scheme, which were drafted in May,
set up a 'positive list' of prescription drugs for which the government
will reimburse people.

US pharmaceutical manufacturers are concerned that many of their own
drugs may not be on the list eligible for reimbursement. Deputy US Trade
Representative Wendy Cutler, Washington's chief negotiator in the talks,
said that Seoul's decision to proceed with the reform plan was
"inconsistent with=85 the market-opening spirit of the FTA" and "precluded
meaningful negotiations." She argued that it was necessary to suspend
work on services as well as trade remedies such as anti-dumping duties
and countervailing measures "in order to ensure continued balance in the
overall negotiations."

Nevertheless, both Cutler and Korean lead negotiator Kim Jong-hoon
maintained that the differences were not insurmountable, and that they
remained committed to finding common ground.

Rice -- specifically access to Korea's highly protected market --
remains another contentious issue. Korean press reports quote Kim as
insisting that rice tariffs and import volumes were not up for
negotiation, even though Cutler said that it was "no secret" that the US
would seek increased market access for rice.

The US is also seeking more open access for its automotive exports and
insurance companies.

Korea's famously militant farmers' groups are strongly opposed to the
talks, and organised several protests during the recent negotiations.

Civil society groups have expressed concern about how Washington's
demands might affect drug prices.

The next round of negotiations is scheduled to take place in September.
The US and Korea are hoping to conclude the talks in time for the
mid-2007 expiry of the Bush administration's fast-track authority to
negotiate trade agreements.

ICTSD reporting; "US boycotts discussions on medicines in FTA talks with
S. Korea," HANKYOREH, 13 July 2006, "Korea-US FTA Talks Bog Down," KOREA
TIMES, 14 July 2006; "S. Korea, US Reach Impasse on Drugs, Rice in $29
Bln Talks," BLOOMBERG, 13 July 2006; "Korea, US fail to complete second
FTA talks," KOREA HERALD, 14 July 2006.