The U.S. and Korean trade chiefs meet near Washington tomorrow and Wednesday to work towards resolution of the issues left over from the G-20 summit in Seoul. The U.S. is pressing Korea to give ground:
The U.S. will reportedly request South Korea to abolish the tariffs on U.S. exported beef earlier and open the market to U.S. processed beef products. It also appears that the U.S. will repeat its demand of more concessions from South Korea in auto issues including the extension of 2.5 percent-tariff abolition deadline on South Korean cars, the total abolition of duty drawbacks, adoption of safeguards and an easing environmental regulations. (KORUS FTA renegotiations resume)
Korea currently allows only imports of American beef from cattle less than 30 months old over fears of mad cow disease, while the U.S. has been demanding the country accept all cuts of beef irrespective of cattle age. (Korea, US to resume FTA talks)
A Congressional Research Service report from September (Pending U.S. and EU Free Trade Agreements with South Korea: Possible Implications for Automobile and Other Manufacturing Industries) provides some helpful background on the auto issues.
How might Korea respond on autos:
According to officials close to the talks, Korea appears willing to compromise on the key issues related to auto trade, and it’s possible that the countries could agree on a new set of rules regarding fuel efficiency, emissions and safety requirements for American cars sold in Korea.
Regarding the issue of duty drawbacks, the countries will likely settle for Korea employing a five-percent cap on the refundable tariffs, identical to the condition agreed on its FTA with the European Union (EU).(Korea, US to resume FTA talks)
What about beef:
It remains to be seen, however, whether beef will continue to be the deal breaker.
The Koreans, reluctant to touch the subject due to public sensitivity here, have been insisting repeatedly that beef should have no part in the FTA talks, only to be flustered by the U.S. attempts to bring the issue back again and again to the negotiating table. (Korea, US to resume FTA talks)
Does Korea want anything in exchange for all this:
Korea will prepare new strategies before resuming free trade talks with the U.S. next month in Washington, a high-ranking official at the Korean Foreign Affairs and Trade Ministry said Wednesday.
“Further rounds of negotiations will be impossible if we adhere to our current clauses. We are preparing new strategies,” the official said.
The new plan is known to include the protection of Korea’s relatively vulnerable pharmaceuticals and agricultural markets. On pharmaceuticals, Seoul will ask Washington to delay by 18 months a ban on the sale of reproduced American drugs in Korea before the patents expire for the original drugs.
The Korean government will also strengthen safeguard measures for agricultural products.
In addition, adjustment of what Korean opposition parties call “poison pill” clauses is under review. These include the negative list system for services allowing the opening of all service products except those specifically prohibited and a ratchet clause that bars going back to pre-free trade deal days.
Seoul, however, will not exclude the maligned investor-state dispute settlement clause, which allows a private investor to legally challenge a host government`s public policy.
A high-ranking Korean Foreign Ministry official said, “The government believes that the investor-state dispute settlement mechanism is not a poison clause but something Korea needs. We won’t cover it in our next round of negotiations.”
Another official said, “We’ll include important items we requested in negotiations in 2007 but left out in the final agreement. We are preparing various cards.” (New strategies prepared for next month`s FTA talks with US)
Is that all the U.S. wants? Obama recently entertained a Congressional delegation skeptical of current approaches to trade agreements. The group's leader "outlined for the president changes that he and others in the group want in a pending free-trade agreement with South Korea: clearer labor standards, more targeted tariff reduction for small and medium manufactures, and more focus on trade deficit reduction." (The Korea - U.S. FTA: Negotiating with Congress).
Are the U.S. and Korea more likely to compromise given North Korea's actions over the last couple of weeks?
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