Seoul Says Won’t Rush Into U.S. Bilateral Trade Deal

By: Anna Fifield in Seoul
Financial Times
Published: April 17 2006
http://news.ft.com/cms/s/3bae0564-cdfd-11da-a032-0000779e2340.html

On Monday, April 17, 2006, South Korea’s trade minister, Kim Hyun-Chong, announced that Seoul and the United States would not enter in to a bilateral trade agreement, even though the two countries set a quick timetable from completing the deal. Perhaps this haste in completing the agreement by a specific deadline caused hesitation on the part of South Korea. Kim has said that he would be more comfortable If there was more time to reach an agreement before the formal negotiations begin on June 5, 2006. This agreement would likely require South Korea to open its car, pharmaceutical and part of its agricultural markets. This seems like a large requirement for South Korea, but Kim says that Seoul does have a minimum bottom line. In order for both countries to receive the necessary domestic approval for this bilateral trade agreement, the overall package much be balanced and consider the concerns of both countries.

On Saturday, 17,000 people protested the deal, arguing that it would increase South Korea’s economic reliance on the United States. South Korea is seeking to exclude rice from the deal, like it is excluded from multilateral trade agreements until 2015. The first part of negotiations begins on June 5th and will conclude in March 2007. The completed deal would then go through the U.S.’s Trade Promotion Authority (which has the power to negotiate trade deals without amendment procedures from the U.S. Congress). This process must be completed before the deal expires in June 2007.

The negotiations will likely be difficult because the U.S. will likely “to push for changes in “grey” areas of non-tariff trade barriers as well as on black-and-white tariffs issues.” Finally, there is friction over products manufactures at the Kaesong industrial park in North Korean because the U.S. is opposed that these products be considered “made in Korea.”

Questions:

1) Why would the U.S. be opposed to labeling the products made in the North Korean factory, “made in Korea”?

2) What is the likelihood that the United States and Seoul will reach an agreement in a timely fashion regarding the car, pharmaceutical, and agricultural markets?

3) What is the likely outcome of these negotiations? Will they be balanced? How will the South Korean population react to this agreement, if passed?