[Ip-health] Tensions at US-Korean FTA Talks Leave Little Room for Optimism

[Mike Palmedo]

Tensions at US-Korean FTA Talks Leave Little Room for Optimism - NK
Kaesong products seen as biggest impediment

Terence Mitchell
omynews.com
2006-06-07 06:11 (KST)

The opening of the FTA negotiations in Washington DC yesterday was,
according to reporters present, a tense and cautious affair, as both
countries have a lot to gain or lose in any new agreement.

Talks got off to a bumpy start as American delegates expressed their
"disappointment" that Korea had already made public their draft demands
from previous meetings in March, asking that from now on the
negotiations be more discreet lest "it create misunderstandings."

The draft document shows the wide range of issues the two countries
disagree on, particularly in the automobile, pharmaceutical and
agriculture industries.
However one issue where there seems to be little room for negotiation is
how products manufactured in South Korea's new industrial complex in
Kaesong, North Korea should be labeled.

The Koreans are requesting that all Kaesong products be labeled as made
in South Korea, since Kaesong is an inter-Korean project. However US
delegates have rejected this, pointing out that the US will never accept
any products made in North Korea, officially regarded as a rogue regime
and therefore subject to economic sanctions.

One top negotiator, Kim Sung-jin, said on a radio show Monday that it
would be =93difficult to persuade the U.S. to regard Kaesong goods as
South Korean, but we will do our best in view of the special nature of
inter-Korean relations."

To many analysts this disagreement is a reflection of the two countries'
diverging views on how to deal with the threat of North Korea.

South Korea continues its six-year effort to gradually open the North up
to international investment, while the US under President Bush prefers
pressuring the communist state into "regime change" via an economic and
financial blockade.

Most economic analysts however agree that the FTA would provide
significant economic advantages to both countries, and would be
particularly important in reviving Korea=92s sluggish economy where growth
has reportedly slowed by more than 2 percent in the last year alone.

The Roh administration has also made great efforts to point out the
strategic benefits for the nation, such as the raising of South Korea's
credit ratings, and gaining an important advantage over China, Korea's
main rival for business with the US.

The FTA with the US would also strengthen the US-Korea alliance,
particularly significant now that both governments have decided to scrap
their Korea-US Combined Forces Command by 2012.

However reaction from the Korean media has been generally critical to
negotiations, with several leading newspapers suggesting the FTA could
seriously undermine Korea's domestic markets as larger and more
resourceful American companies move in.

One editorial in the Korea Times yesterday suggested it would be
preferable that talks break down rather than key industries such as
agriculture be negatively affected.

President Roh has also been criticized for agreeing to US preconditions
to the trade talks, plus his promise to the US that he would personally
intercede to ensure the FTA would be completed within a year, a clear
signal to some critics that he is only too willing to make concessions.

However in the context of the government's huge losses in the May 31
elections, it is unlikely Roh will be able to maintain his political
influence in the talks.

It is instead predicted he will be kept busy holding his administration
together as the opposition, now emboldened by election success, steps up
their attacks in the lead-up to next year's presidential elections.