Rough ride for trade pact
South Korean officials began talks with their US counterparts in late 2004, with a view to concluding a free trade agreement (FTA) before the fast-track authority of the US president to pass trade promotion legislation expires on July 1, 2007. As deals had to be signed 90 days before that date to receive congressional approval, the deadline for signature was April 2. The deal was not closed until that very day, underlining the difficulties that beset negotiations, and hostility emerged on both sides after the announcement was made.
In the US, senators angry that South Korea had not fully opened its agricultural markets to American beef exports are threatening to delay ratification. If they succeed, then the pact could falter, as Congress is now dominated by Democrats, many of whom have expressed opposition to free trade deals with nations that do not pledge to maintain high standards in their labour practices.
On the Korean side, the obstacles could be even more daunting. Trade unions took to the streets in protest against the removal of tariffs on manufactured imports, even though these are being phased in very gradually (over 15 years), and details such as rules of origin remain to be set, potentially diluting the effects of the agreement. In this context, Chong Woo Chun, senior economist at Standard Chartered in Seoul, believes ratification may have to wait until after the parliamentary election in April 2008, perhaps being delayed until September of that year.
Enthusiasm
Despite these criticisms, South Korean president Roh Moo-hyun’s enthusiasm for further FTAs appears undimmed. He has recently proposed a deal with the Gulf Cooperation Council, while a committee has been set up to investigate the possibility of a pact with Iran. Talks with the EU, Canada and China are also ongoing, but in practice, Korea’s Asian partners may be anxious about the implications of the US arrangement. Taiwan’s labour minister Lee Ying-yuan expressed concerns that the Korean agreement would harm his own country’s exports of high-tech goods to the US, and Japanese commentators are urging their government to reconsider its traditional scepticism of FTAs.
All of which is a powerful reaction to a deal that seems mostly designed to meet the deadline for the US president’s trade promotion authority, and still leaves much to be clarified. Moreover, the services sector is entirely excluded from the deal, as are rice imports to Korea, a traditionally sensitive area. —P.A.