Korea-U.S. FTA

Government moves to permit U.S. beef exports

On Thursday (in Seoul) the government announced plans to allow imports of beef from the U.S.: Beef Import Decision Triggers Protests (Michael Ha, Park Si-soo, The Korea Times, May 29).  The announcement was made in a nationally televised address by the Agriculture Minister:

Chronology of the beef dispute

TradingMarkets.com provides a useful Chronology of major events in S. Korea-U.S. beef talks (May 30). This covers events from the announcement in 2003 that a Washington State cow had mad cow disease, to this Thursday's announcement by the Agriculture Minister that the government intended to permit beef imports from the U.S. to resume.

What's Driving the Beef Controversy in Korea?

I know I've been surprised by the intensity and persistence of the Korean opposition to the beef agreement in recent weeks. 

Donald Kirk provides an analysis that he attributes to experts at the East-West center in Hawaii: South Korea's Lee takes a grilling (Asia Times, May 24).  The suggestion is that at least some in Korea have an agenda that goes beyond simply preventing beef imports:

...Lee finds himself under vitriolic, unrelenting attack from leftist activists who've found a weakness in his armor of conservative popularity and support. Lee's foes have picked on the issue of the deal that his government made with US negotiators in the hours before he met Bush to resume importing US beef. After regular nightly demonstrations, they've broadened their protests into a general assault on Lee that threatens to deepen existing divisions among conservatives and force Lee into compromises he had hoped to avoid....

Strategists for the United Democratic Party, the main opposition grouping, see the beef protests as critical to a chain reaction. The first step is to undermine the beef agreement, and the next is to convince a majority of US Congress members that South Koreans will not import US beef, agreement or no agreement. In that event, the Congress would be likely either to vote against ratification - or fail to vote at all.

At the same time, Lee's foes promise to do all they can to tear the FTA apart when it comes up for a vote in the National Assembly. Lee's Grand National Party holds a slim majority only when drawing on support of conservatives outside the party, and Lee also has to wheel and deal with conservatives close to his main foe inside his party, the unpredictable Park Keun-hye, daughter of Park Chung-hee, the dictatorial president who was assassinated in 1979.

Analysts see the fight over importing US beef as the lever with which activists who oppose not only Lee but also the US-Korean alliance hope to revive their flagging movement. Beef as an issue for the moment has far more traction than negotiations on getting North Korea finally to give up its nukes.

The first paragraph makes a lot of sense to me as a partisan strategy for the UDP; even non-leftist elements would be tempted to take it.  I am surprised at the implication in the later paragraphs  that deep-sixing the U.S.-Korea Alliance is a "UDP" agenda item; the trade deal was negotiated by a UDP president. Although, again, it does make sense that there are people in Korea, and in the UDP, exploiting the beef deal for just that purpose. 

Back and Forth in DC

On Wednesday, Hillary Clinton and 11 other Democratic Senators released a letter opposing ratification of the agreement with Korea: Hillary, senators tell Bush they oppose Korea FTA (Yonhap News, May 26).

On Friday, Bush made a pitch for Congress to take up and ratify the bilateral trade agreements lined up for consideration ( Bush Pushes for Free-Trade Deal Approvals, John McKinnon, Wall Street Journal, May 24).  Here's the text of his remarks: (President Bush Discusses World Trade Week ).

Obama released a letter Friday, just after Bush's remarks, urging him not to submit the agreement (Obama urges Bush not to submit Korea deal to Congress (Doug Palmer, Reuters, May 23)):

"Instead of provoking unnecessary and potentially corrosive confrontation over this agreement, your administration could make a significant contribution toward re-establishing trust with Congress and restoring bipartisan cooperation on trade by withholding the agreement," Obama said....

"Like many members of Congress, I oppose the U.S.-Korea FTA, which I believe is badly flawed. In particular, the terms of the agreement fall well short of assuring effective, enforceable market access for American exports of manufactured goods and many agricultural products," Obama said.

He singled out the automobile provisions as unfairly tilted in South Korea's favour.

"Approval of the agreement as negotiated would give Korean exports essentially unfettered access to the U.S. market and would eliminate our best opportunity for obtaining genuinely reciprocal market access in one of the world's largest economies," Obama said.

Palmer notes that Obama's letter "...followed a similar letter this week signed by New York Sen. Hillary Clinton, Obama's rival for the Democratic nomination, and nine other Democrats."

Palmer describes one Republican spokesman's response to Obama's letter (Obama urges Bush back off South Korea trade deal) (Palmer, Reuters via bilaterals.org, May 23):

"Barack Obama’s letter is the sort of naive isolationism that will slow job growth at home and damage our relationship with a key ally," Republican National Committee spokesman Alex Conant said in a statement.

"It’s concerning that while Obama lectures us about the need to negotiate with our enemies, he would simultaneously reject a closer relationship with an ally who deployed the third-largest contingent of troops to Iraq," Conant added.

Edit May 31: added sentance about the Clinton letter.

As the 17th National Assembly Comes to an end...

It's Saturday afternoon, May 24, in Seoul, and 17th National Assembly should be coming to an end.  The Dong-A Ilbo reports that there is talk of an extraordinary session from the 26th to the 29th, but says that this is unlikely to happen: National Assembly in Tug-of-war Over KORUS FTA (May 23).

Korean Institutional Reform

Marcus Noland and Erik Weeks looked at some 52 published indices of Korean institutional health (measures of preceptions of corruption, protectionism, discrimination, strenght of auditing and reporting standards, as so on) and compared them to those for other countries: Korean Institutional Reform in Comparative Perspective (Korean Economic Institute Academic Paper Series, May 2008).

Korea is arguably the premier development success story of the last half century. Despite this success, there has been a nagging sense among many observers that the development of Korea’s economic and political institutions has not kept pace with the breakneck tempo of economic growth.

Bottom line:

Although the data are noisy, and Korea generally underperforms modestly relative to its level of per capita income, the country is not an outlier; and on most indicators Korea is converging on global norms.

But:

It would be hard to argue on the basis of this analysis that institutional development has led economic growth in Korea.

Noland and Weeks point to the importance of international norms as an "external policy anchor":

No Resolution on Beef; No Movement on FTA

Moon Ihlwan thinks much of the current controversy is due to poor communications by the new Lee Administration: Could Korean Leader Learn from Controversies over U.S. Beef Imports? (Eye on Asia, Business Week, May 15).

Why is Korea Getting Less Foreign Investment?

Net foreign investment in Korea has dropped from $10 billion in 2004 to -$670 million in the first quarter of 2008.  Brendan Carr explains why: Foreign Investment in Korea Continues to Plummet (Brendan Carr, Korea Law Blog, May 6).

The On-going Beef Controversy

U.S. Commerce Secretary Carlos Gutierrez visited Korea on Friday and offered assurances about the quality of U.S. beef (U.S. Assures Korea About Beef Safety, Evan Ramstad, Wall Street Journal, May 17):

Korea Delays Resumption of U.S. Beef Imports

The Lee Administration was supposed to open the way for a resumption of imports of U.S. beef by the publication of new sanitary standards last Thursday (May 15), but - because of the "mad cow" controversy - has postponed publication for a week or so: SKorea to delay planned resumption of US beef imports (AFP):