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TRADE: US Seeks Wide-Ranging Deal With South Korea

Emad Mekay

WASHINGTON, Feb 2 2006 (IPS) - U.S. business lobby groups reacted enthusiastically to news Thursday that the United States and South Korea would start trade talks to remove barriers to firms doing business in both countries, and called for a deal that would expand U.S. exports.

U.S. Trade Representative Rob Portman made the announcement at the U.S. Capitol building, together with South Korean Trade Minister Hyun-chong Kim. The talks will begin in three months, the period for initial consultations.

“This is the most commercially significant free trade negotiation we have embarked on in 15 years,” said Portman.

South Korea is the world’s 10th largest economy, with an annual GDP rapidly approaching one trillion. The Asian country is the United States’ seventh largest export market and is the fifth largest international market for U.S. agricultural goods.

The prospective deal with South Korea would be the largest free trade agreement (FTA) for the U.S. since the North American Free Trade Agreement (NAFTA), which joins the United States with Mexico and Canada.

“Removing trade and investment barriers between our two nations through an FTA will increase market access for our farmers, ranchers, workers and businesses to the dynamic and growing Korean economy, boosting trade in goods and services,” Portman said

Trade between Washington and Seoul topped 72 billion dollars last year. U.S. exports to South Korea include agricultural products, aircraft, machinery and organic chemicals, while Korea sells cars, telecommunications equipment and electronics.

U.S. business groups welcomed the news and said they will work to shape the difficult talks ahead. The National Association of Manufacturers (NAM) said it was “enormously pleased” by Thursday’s announcement.

“An FTA with Korea would be a big deal for U.S. manufacturers,” said NAM President John Engler. “The United States exported 24 billion dollars of manufactured goods to Korea last year alone. That number would grow substantially with an FTA and both the American and Korean economies would benefit considerably.”

Industry insiders say the talks will not be easy. Korea currently has high tariffs and various non-tariff barriers (NTBs) facing many U.S. exports.

“South Korea already is a very important market for the United States, but we do not have a level playing field,” said Harold McGraw III of the Business Roundtable, a pressure group.

“The negotiations will be challenging, but we are committed to making them a success,” he added.

Another industry group, the U.S. Chamber of Commerce, the world’s largest business federation with a membership of three million businesses and organisations, said the deal should not exclude any product or service.

“A mutually beneficial FTA will advance U.S. business interests by improving market access for agricultural and manufactured goods, opening services markets, and enhancing intellectual property and investor protections,” said U.S. Chamber President Tom Donohue.

NAM says it will soon convene a Korea Working Group that will draft a bill of particulars to take to U.S. negotiators.

Last month, watchdog groups critical of current trade rules as unfair to workers, farmers and the poor, lamented the closeness of industry and business groups in the United States to trade decision-making.

ActionAid International said its research found that 93 percent of the external advisors to the U.S. trade agency come from corporate lobby groups and multinational companies such as Burger King, Coca-Cola, McDonald’s and Pfizer.

Civil society groups and some developing nations have called for a slower pace in trade negotiations, arguing that the benefits of market liberalisation have been wildly exaggerated and mostly go to multinational corporations and the local elites in developing countries.

Korean farmers took to the streets to protest a meeting of the World Trade Organisation last December in Hong Kong that sought to liberalise trade in agriculture.

Washington has stepped up its efforts to open new markets to U.S. goods through a spate of bilateral and regional trade deals and through multilateral talks at the World Trade Organisation.

The Bush administration has put FTAs into effect with Jordan, Chile, Singapore, Australia, and Morocco and completed talks on FTAs with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Bahrain, Oman and Peru.

The USTR office says that talks are also underway or about to begin with 11 more countries, including Panama, Colombia, Ecuador, Thailand, the five nations of the Southern African Customs Union (SACU) and the United Arab Emirates.