[Ip-health] USTR press release on KORUS FTA

[Stephanie Weinberg]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C. 20508

USTR Press Releases are available on the USTR website at www.ustr.gov

For Immediate Release:
July 14, 2006

Statement of Assistant USTR Wendy Culter on the Conclusion of the
Second Round of Negotiations of the KORUS FTA

"Thank you. First, I would like to thank the Korean Government and the
management and staff of the Shilla Hotel for doing such a wonderful job
in hosting me and my delegation this week.

"I spent all of my time at the hotel this week, but if I had to be stuck
in one building for an entire week due to our busy schedule and the
weather, I can't think of a place as nice and friendly at this hotel.

"We wrapped up the second round of the KORUS FTA negotiations today.
This was a busy week, with the teams working around the clock.

"Overall, we made reasonable progress this week. We continued to develop
a better understanding of each other's position and to bridge
differences, and in trade jargon, remove brackets in many of these
areas.

"We agreed on the timeframes for tariff phase-outs for industrial goods,
which is a very significant step and we are nearing agreement on the
timeframes for tariff phase-outs for agricultural and textiles goods,
setting the stage for the exchange of tariff offers by mid-August.

"We also exchanged initial offers in services and investment, and made
progress in a number of other negotiating groups.

"FTA negotiations are complex, particularly when you are talking about
two large and sophisticated economies like the United States and Korea.
In any FTA, it is customary for the early negotiating rounds to focus on
the less complex issues, That is an accurate characterization of our
meetings this week.

"Each FTA also has its share of difficult and controversial issues. The
KORUS FTA is no exception.

"On pharmaceuticals, I'm sure you're aware that thing did not go as
planned. First, let me make clear, the United States position is not to
challenge the basic premise of Korea's national healthcare system nor
are we trying to block reform. That is not our objective. We recognize
Korea faces an aging population and rising health care costs - the
United States and other countries around the world faces similar
challenges. What we are saying is any reform should be transparent and
fair, and not disproportionately target foreign pharmaceutical products.


"Going into these negotiations, we had agreed to establish a dedicated
working group to discuss pharmaceutical trade issues. To our surprise,
upon our arrival in Seoul, we were informed that Korea was going to
switch to a positive list system for the reimbursement of pharmaceutical
products before we had the opportunity to have meaningful negotiations
on these issues.

"In our view, the decision to proceed with this plan is inconsistent
with both the mandate of the Pharmaceutical Working Group and the
market-opening spirit of the FTA. In short, Korea's decision precluded
meaningful negotiations at this time. Therefore, in order to ensure
continued balance in the overall negotiations, we felt that it was
appropriate to suspend work in two additional groups: trade remedies and
services.

"We believe that this was a balanced and measured response that
appropriately reflected our level of concern.

"Clearly, our preference would have been for all the groups to have met
this week as scheduled.
But, under the circumstances, we were left with no choice.

"That said, while our differences in views in the pharmaceutical sector
are challenging and difficult, they are not insurmountable. Ambassador
Kim and I have agreed to continue to work together to get things back on
track with respect to pharmaceuticals so as to allow for a productive
third round during the week of September 4th.

"For our part, the United States continues to believe the FTA will
generate significant commercial, economic, and strategic benefits for
both our countries.

"We remain as convinced as ever that the KORUS FTA is the right path for
the United States and Korea, both now and for the coming generations."

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