KORUSFTA

I'm going to try and pull together a set of annotated links to web based materials on the U.S. - So. Korea FTA negotiations over the next few months. 

This post is subject to ongoing revision, reorganization, and elaboration.  Last updated July 19.

Background

The decision to negotiate

Wonhyuk Lim wonders why the Roh government chose to begin negotiations now, and why it began negotiations with important concessions.  He's skeptical about the economic and political benefits of an FTA.  I posted on his article here: Why did Roh do it? (July 17)

The proposed negotiations were announced on February 2.  The USTR web site has a copy of the U.S. press release, the remarks of then USTR Rob Portman and the Korean Trade Minister Hyun-chong Kim, and their response to press questions at the announcement of the negotiations, and letters from the USTR to the Speaker of the House, and the President Pro Tem of the Senate .

On February 9, the USTR's office published a notice in the Federal Register announcing its intent to negotiate an FTA with the Koreans, and requesting public comment

...to assist the United States Trade Representative (USTR) in amplifying and clarifying negotiating objectives for the proposed agreement and to provide advice on how specific goods and services and other matters should be treated under the proposed agreement. (71 FR 6820)

The notice said that the interagency Trade Policy Committee would hold a public hearing to collect comment on March 3.  The Korea Economic Institute has posted Final Submitted Written Testimony From Trade Policy Staff Committee Hearings to the web.

The Clinton era Executive order 13141 (November 1999) requires an environmental review of trade agreements.   Guidelines for the conduct of environmental reviews were published in the Federal Register in December 2000 (65 FR 79442).   On March 3, the USTR's office published a notice that, purusant to the Trade Act of 2002, and E.O. 13141, it was beginning the environmental review, and requsting comments (71 FR 10999). 

Estimates of potential economic benefits

Cooper and Manyin report the results of several studies in their overview paper on the negotiations: The Proposed South Korea-U.S. Free Trade Agreement (KORUSFTA)  (Congressional Research Service, May 2006, pages C-22 to C-24):

• The U.S. International Trade Commission did a study in 2001: U.S.-Korea FTA: The Economic Impact of Establishing a Free Trade Agreement (FTA) Between the United States and the Republic of Korea  .
• Junkyu Lee and Hongshik Lee reported on economic impact estimates: Feasibility and Economic Effects of Korea-U.S. FTA (Korea Economic Institute, February 2005)
• Jeffrey Schott, Scott Bradford, Thomas Moll report the results of a general equilibrium modeling exercise in Negotiating the Korea–United States Free Trade Agreement (IIE, June 2006).  I summarized some of this analysis here: Are there large potential benefits from a U.S.-S. Korea FTA? (June 18, 2006)

For perspective, I'd also suggest reading the July 13, 2006, Economist article on the use of general equilibrium modeling to evaluate the benefits of trade agreements: Economic models. Big Questions and Big Numbers (this article addesses models used to evaluate multilateral agreements).  Jonathan Dingel at Trade Diversion points to another article, that raises caution flags about the use of general equilibrium models to address preferential agreements : CGE (July 14)

Gathering public input

The USTR Trade Policy Committee requested written public input on the environmental consequences of the negotiations: Trade Policy Staff Committee; Initiation of Environmental Review of Proposed Free Trade Agreement Between the United States and Korea; Public Comments on Scope of Environmental Review  (71 FR 10999)

Movie quotas

Since the 1960s, Korea required movie theaters to show Korean films 146 days a year.  This past January, the government announced that it was going to cut the quota in half, to 73 days a year.  The decision was made inorder to smooth the way to the FTA negotiations:  The king, the clown and the quota (The Economist, Feb 16)  The next day, the Korean government announced a fund to provide financial support for domestic movie makers.  Half the fund was to come from a 5% tax on movie tickets: Fund Set up for Development of Korean Film Industry (Suni Kim, Jan 27).  The quota cut became effective on July 1.

Activists protested at the Cannes Film Festival in May: Koreans, French Fight Hollywood Domination (Paolo Bertolin, The Korea Times, May 21).   The Executive Director of the International Network for Cultural Diversity, Gary Neil, visited Korea in early June to buck up supporters of the quota.  He was interviewed by OhmyNews: [Interview] Protect Korean Cinema (June 15).   The Chosun Ilbo ran a story comparing Korean and U.S. taste in movie heroes on July 13, during the second session of negotiations: Cinemas Showcase Heroes, American- and Korean-Style  .

The Kaesong industrial park is an important part of So. Korea's attempts to engage the North.  At this industrial park, located just over the border in No. Korea, southern firms will use northern labor to produce manufactures.  The South would like the U.S. to treat these goods as originating in So. Korea, the U.S. has innumerable concerns.  Cooper and Manyin have a short discussion of the issue in The Proposed South Korea-U.S. Free Trade Agreement (KORUSFTA) (Congressional Research Service, May 2006).    Schott et al. discuss this in Negotiating the Korea–United States Free Trade Agreement (IIE, June 2006).  I provided an annotated abstract of this discussion in the post Kaesong (July 4, 2006).

Jonathan Dingel posts on the Korean film quotas here: Cultural Protectionism: Korea's Screen Quota (Trade Diversion, July 18).  He has nice links to papers on cultural protection, and the impact of globalization on local cultures, by Korean economist Kim Young-bong and George Mason economist Tyler Cowen.

Pharmaceuticals

Pharmaceuticals are expected to be an important issue in the negotiations.  Schott et al. (Negotiating the Korea–United States Free Trade Agreement) survey the problems on page 10.  The Korean health care system is facing the same cost and financing issues found in other developed countries with aging populations, and its looking for ways to control costs.  The U.S. is concerned that cost-control measures not disadvantage its products.

Autos

The U.S. imports about 800,000 Korean cars, the Koreans only import about 4,000 U.S. cars.  The U.S. hopes to use the negotiations to reduce obstacles to her exports.  This article from The Korean Times, the first in a series, discusses one issue: a Korean tax based on engine sizes, which increases the costs of the larger vehicles in which the U.S. specializes: 800,000 to 4,000 _ Where Korea, US Stand (Park Hyong-ki, July 18 - thanks to Richard Baldwin for the pointer to this story).

Negotiations open

Organization of the negotiations

The Korean Embassy FTA web pages have useful information on the organization of the negotiations, including the timing and location of the negotiating sessions, the major issues under negotiation, and lists of key members of the U.S. and Korean negotiating teams: Current status .

Cutler statement on July 14: Statement of Assistant USTR Wendy Culter on the Conclusion of the Second Round of Negotiations of the KORUS FTA (July 14):

"FTA negotiations are complex, particularly when you are talking about two large and sophisticated economies like the United States and Korea.  In any FTA, it is customary for the early negotiating rounds to focus on the less complex issues, That is an accurate characterization of our meetings this week.

Negotiating sessions

First negotiating session - June (Washington)

Wendy Cutler, the chief U.S. negotiator, gave a press conference following the opening plenary session for the first negotiations.  Here is the transcript.

Second negotiating session - July 10-14 (Seoul) 

The negotiations took place at the Shilla Hotel in Seoul the week of July10.   Disagreements about how Korea should handle pharmaceuticals reimbursement in its national health care system caused a number of problems and led to the suspension of negotiations in several areas.  Here's a more detailed account: FTA negotiations in Seoul .

Breakdown of Doha Round negotiations

The Doha Round of multilateral trade negotiations broke down on Monday, July 24, two weeks after the start of the second KORUS round: US blamed as trade talks end in acrimony (Alan Beattie and Frances Williams, Financial Times, July 24)

Exchange of tariff offers in mid-August

September

October

December

Ratification

In late July, 2006, the Korean administration created a special committee in the President's office, headed by a former Finance Minister, to promote the FTA inside Korea: Ex-finance minister Han to head FTA committee (Kim Ji-hyun, The Korea Herald, July 31).

On July 31, a special committee of the Korean legislature, the "Special committee for the Korea-U.S. FTA in the nationa assembly," began to meet.  The committee planned to meet weekly to review the range of issues connected with the FTA.  Lawmakers Mulling Free Trade Agreement (The Dong-A llbo, August 1, 2006).

 

Comments

[Richard Baldwin]

Did you see this?
http://times.hankooki.com/lpage/biz/200607/kt2006071818222711910.htm