[Ip-health] [korus-fta may be changed?

[Sean Flynn]

From: Michael Palmedo

[snip]

USTR has taken the position that an FTA can still be changed over the
next
30 days up to the deadline when U.S. industry advisors have to complete
their assessment of the deal, according to a USTR spokesman.

[snip]

-----Original Message-----

Inside US Trade
Bush Administration Provides Partial Korea FTA To Congress
______________________________________________

Date: April 6, 2007

The Bush Administration mid-week provided Congress parts of the text for
the
newly concluded free trade agreement with Korea but has not committed to
a
deadline of when it will provide the full text, according to
congressional
aides.

The Office of the U.S. Trade Representative submitted "more than half"
of
the FTA text to Congress and cleared industry and agriculture advisors
who
will have to assess the agreement for a formal report to Congress within
a
month, Assistant U.S. Trade Representative for Japan, Korea and APEC
Wendy
Cutler said on April 5.

But a critic of the FTA said that the text provided does not cover many
of
the controversial issues that were settled in the last round of
negotiations
that ended on April 1.

Deputy U.S. Trade Representative Karan Bhatia said on April 2 the U.S.
and
Korea are in the process of "writing up" the agreement after their final
marathon negotiating session, but he emphasized that was not unusual.
"There
is always additional legal drafting that needs to occur, so we'll be
doing
that," he said.

Unresolved is the issue of which standards the FTA should contain with
respect to labor and the environment. USTR says the text now reflects
the
obligation for each signatory to enforce its own laws, a standard that
House
Democrats have criticized as insufficient and are seeking to strengthen
in
discussions with the Administration for a new FTA template.

As a result of these on-going efforts, there "may be a need" to revisit
the
labor and environment issues, Bhatia said. He signaled that Korea was
not
happy with the fact that there was no final U.S. government position on
the
labor and environment provisions. "[If] it turns out that there are
changes
that would need to be made on labor and environment in order to obtain
congressional passage, . . . we'll make a decision jointly as to whether
those changes would be acceptable to Korea," he said.

Bhatia emphasized that Korea is a "different case" in terms of labor
rights
compared to other countries with which the U.S. has concluded FTAs
because
it has strong labor rights and strong unions.

USTR has taken the position that an FTA can still be changed over the
next
30 days up to the deadline when U.S. industry advisors have to complete
their assessment of the deal, according to a USTR spokesman.

The Bush Administration on April 1 formally notified Congress of its
intent
to sign the FTA just "minutes before the expiration of the [statutory]
deadline" of midnight, and this was possible because Congress agreed to
have
someone available to formally receive the letter of notification at that
time, the spokesman said.

Congress was out of session at that time, but the fast-track law does
not
contain a requirement that Congress be in session to receive the formal
notification of an Administration's intent to sign a trade agreement,
according to a Senate aide. Therefore, the Administration met the
statutory
requirements of the fast-track law, he said. Separately, a USTR
spokesman
said the deadline for the submission of the notification was determined
after consultations with Congress and an internal assessment by USTR
lawyers.

U.S. negotiators had initially told their Korean counterparts that the
deadline was late March 30 in Washington, D.C.

The fast-track law provides that a trade agreement can be signed 90 days
after the administration formally notifies to Congress its intent to do
so.
Notifying the Korea FTA on April 1 means it can be signed before fast
track
expires on July 1 this year. Once a trade agreement is signed, it can be
considered under fast track with an up-or-down vote even after the law
itself has expired.

Bhatia also said the Korea FTA will pressure other Asian economies to
negotiate FTAs with the U.S. "To be honest with you, there is a
possibility
that a successful Korea-U.S. FTA will be the stepping stone to a wave of
liberalization in East Asia."

He also said the FTA with Korea contains stronger commitments than any
other
FTA negotiated by the U.S. in such areas of financial services,
transparency
and competition.


Inside US Trade
Bhatia Cool To Auto Changes In Korea FTA, Takes On Critics
_______________________________________________

Date: April 6, 2007

Deputy U.S. Trade Representative Karan Bhatia this week ruled out
changes to
the auto provisions of the newly negotiated U.S.-Korea free trade
agreement
as demanded by House Energy and Commerce Committee Chairman John Dingell
(D-MI) and House Ways and Means Trade Subcommittee Chairman Sander Levin
(D-MI).

"With respect to changes during the 90-day period to the auto
provisions, I
don't anticipate such changes," Bhatia said in an April 4 press
conference.
He insisted that the FTA automotive provisions took "carefully into
consideration the views expressed by industry and also by members of
Congress" and will enable American manufacturers to access the Korean
market.

Both Levin and Dingell charged in their respective public statements
that
the FTA negotiators disregarded the proposal from members of Congress
aimed
at correcting the automotive trade imbalance between Korea and the U.S.
Instead, Dingell said, the agreement has created new opportunities for
Korean carmakers and not for the U.S. industry.

Both Levin and Dingell said they would vote no on the agreement in its
current form. Separately, Sen. Debbie Stabenow (D-MI) strongly
criticized
the Korea FTA and vowed to defeat it at all costs. "The automobile
industry
built the middle class in this country, and by supporting this agreement
the
Administration has turned its back on our working families," she said in
an
April 2 statement.

Similarly, Ford Motor Company and Chrysler Group as well as the
Automotive
Trade Policy Council, which represents all three U.S. automakers on
trade
issues, expressed disappointment over the outcome of the negotiations
but
stopped short of strong criticism. General Motors, which has operations
in
Korea through its partner company, GM-Daewoo, failed to issue a
statement.

Ford Motor Company's Vice President of International Governmental
Affairs
called on Congress to reject the FTA in its "current form" in an April 2
statement. Chrysler Group in an April 2 statement also pledged to oppose
the
agreement "as we currently understand it." The Chrysler statement
pointed
out the company has supported every past FTA the U.S. government has
negotiated.

However, one private-sector source speculated that the auto companies,
though displeased with the outcome of the negotiations, might not lobby
hard
against the FTAs, given the other major issues for which they may need
administration cooperation. This includes fuel standards, developing an
alternative fuel infrastructure and legacy costs, he said.

This may mean that the UAW will emerge as the only strong force in
lobbying
against the Korea FTA, according to this source. In its statement, the
UAW
urged Congress to reject the deal, which it said is one-sided and
threatens
"tens of thousands of U.S. auto jobs."

Bhatia downplayed this criticism and insisted that the auto industry is
better off with this agreement than without it because the FTA provides
for
the elimination of tariff and non-tariff barriers in the Korean market.
"Without this agreement, there is no such assurance," he said. "I would
suggest that [the industry] very much would be better off with the
agreement."

The FTA would phase out the U.S. tariff for certain cars immediately and
the
25 percent truck tariff over 10 years without establishing any specific
market access targets, according to U.S. officials. Some sources
speculated
that the U.S. auto industry is most unhappy with the end of the truck
tariff, which the congressional automotive proposal sought to exclude
from
the FTA.

The 2.5 percent U.S. auto tariff will be immediately be eliminated for
cars
with engine sizes up to 3,000 ccs, Bhatia said on April 2. One
private-sector source said that this covers the bulk of the cars that
Korea
exports to the United States. This would exclude luxury cars or sports
utility vehicles, he said.

In addition, the FTA would phase out Korea's 8 percent tariff on U.S.
cars
immediately upon entry into force, Bhatia said.

Under the agreement, Korea agreed to restructure its engine displacement
tax, which the U.S. had sought to eliminate as a non-tariff barrier, he
said. It will revamp its structure in the first three years after
implementation to "require the leveling of the taxes" so that cars of
the
size the U.S. makes "compet[e] on a level playing field with somewhere
between 70 and 90 percent of the domestic market."

Assistant USTR for Japan, Korea and APEC Wendy Cutler said Korea's
special
consumption tax would be cut to 5 percent from its current 10 percent
within
three years after implementation.

Cutler said Korea also agreed to reduce the number of categories of cars
subject to the tax. By year three of the FTA, she said, about 80 percent
of
Korean and imported cars will be in a common category for engines 1,000
ccs
and above, while cars 1,000 ccs and below will be in a second category.

In addition, Korea has agreed to a bilateral working group that would
keep
abreast of government initiatives on standards development to prevent
future
trade problems. Bhatia said that the group is meant to promote
coordination
between the U.S. and Korea on regulatory issues.

The bilateral working group features a built-in transparency requirement
"to
ensure that there is not coordination [between the Korean government and
Korean industry] that we're not aware of with respect to technical
standards," Bhatia said. "The Koreans can bet that any time they share
written information with any stakeholder outside of their government
concerning a regulation or a technical standard, they have to provide
that
same information to the U.S.-Korea bilateral working group on
automotive."

The FTA also contains an expedited dispute settlement process for autos
that
would last six months between the formal launch of a dispute and the
panel
decision, Bhatia announced. A signatory that brings a successful case
would
have the right to snap its tariffs back to most-favored nation levels,
he
said. "We think that is a very powerful incentive not to violate any of
the
FTA commitments in this area, and the fact that reimposition could
happen
immediately upon the finding by the panel only enhances that deterrent
effect," Bhatia said. "The dispute settlement provision I think very
closely
parallels the request that Congress put forth to us."

Bhatia also said the FTA addresses a set of emissions regulations to
facilitate U.S. automotive exports to Korea. Specifically, he said that
under the FTA, some U.S. cars can enter Korea if they follow a
California
emissions standard, rather than a harder-to-meet Korean standard. --
Luke
Engan
______________