[Ip-health] FT: Health spending issues hit US, Seoul talks

[Mike Palmedo]

http://news.ft.com/cms/s/4f6dcb44-f4b7-11da-86f6-0000779e2340.html

Health spending issues hit US, Seoul talks

Financial Times
By Edward Alden in Washington
June 5 2006 18:26

The US on Monday criticised proposed changes to South Korea=92s scheme for
medical reimbursements, but a senior US trade official expressed
optimism that these and other issues could be resolved in trade
negotiations between the two countries that kicked off on Monday.

Negotiators in more than a dozen different working groups are meeting in
the first round of talks this week, and both countries have embraced the
ambitious goals of completing negotiations by the end of the year.

A trade agreement with Korea would be the biggest concluded by the US
since the 1994 North American Free Trade Agreement with Mexico and Canada.

Wendy Cutler, assistant US trade representative and the chief US
negotiator in the talks, described as =93very unhelpful=94 a proposal made
last month by Korea=92s health and welfare ministry that would change the
rules on government reimbursements for health expenditures. Under the
proposal, new drugs and devices would have to be specially approved for
government reimbursement, a provision that US drug companies fear would
hurt foreign producers of brand drugs while helping Korean generic
drugmakers.

The issue is one of several thorny ones that will have to be cleared
away in the next six months if a deal is to be concluded successfully.

Two-way trade between the US and Korea last year was nearly $72bn
(=8055bn, =A338bn), making Korea the seventh largest US trading partner in
the world. The US is also to start talks next week with Malaysia, its
10th largest trading partner.

Despite the broad scope of the Korean talks, both sides want a year-end
deal so the agreement can be approved by the US Congress under
fast-track trade promotion authority that expires next year.

The toughest issues are likely to be over agriculture and cars.

The US is seeking access to Korea=92s heavily protected rice market, and
wants an end to a variety of restrictive measures that have left foreign
car producers with a tiny sliver of Korea=92s domestic market.

The US is also pressing for Korea to re-open to US beef exports after
shutting them off as a result of the scare over =93mad cow=94 disease,
closing a market worth nearly $800m to US ranchers in 2003.

Korea plans to press the US over its anti-dumping and other rules aimed
at blocking trade imports.

But Ms Cutler said the US was only willing to discuss more limited
provisions regarding =93safeguards=94 against import surges.