S.K., U.S. differ as to whether Kaesong included in FTA

Posted on : 2007-04-05 14:21 KST Modified on : 2019-10-19 20:29 KST
Seoul says it could be deemed an ‘outward processing zone’; U.S. says no clause in FTA refers to joint Korean industrial complex

Differences between Seoul and Washington over how to handle goods made at the joint Korean industrial complex of Kaesong (Gaeseong) under a free trade agreement (FTA) have become more starkly outlined through recent Western media reports.

In an interview with the Financial Times on April 4, Deputy U.S. Trade Representative Karan Bhatia said, “There is no mention of Kaesong in this agreement." He continued, "This agreement is with South Korea, not North Korea. No goods from North Korea can flow into the US under this agreement."

However, Bhatia said the U.S. could discuss the development of economic zones similar to the Kaesong complex via the agreement.

On the same day, the Wall Street Journal reported that "South Korea’s largest trade deal won’t cover the products that emerge from the park."

Responding to the Western media reports that there are ‘no clauses about Kaesong’ in the free trade deal, Trade Minister Kim Hyun-chong, told a National Assembly hearing on April 4 that this was because "the word ‘Kaesong’ was not mentioned in the deal and only brought up as an ‘outward processing zone.’ The U.S. side requested South Korea not to overly emphasize the issue to the public because of its sensitivity; we told the U.S. that this request was impossible to agree upon, given the domestic circumstances." Kim added that the fact that both countries agreed to set up a committee on outward processing zones on the Korean peninsula means that the U.S. admitted the concept of outward processing could apply to the Gaesong (Kaesong) Industrial Complex. "Outward processing zones can be applied to all North Korean regions as well," Kim said. "But it remains to be seen when, on what conditions, and where the zones will be designated."

The Ministry of Foreign Affairs and Trade also said on the same day that South Korea and the U.S. adopted an addendum to the FTA to set up a channel to discuss outward processing zones, including the Gaeseong Industrial Complex. According to the additional terms to the addendum, South Korea and the U.S. agreed to designate an outward processing zone in North Korea, depending on the progress of denuclearization of the Korean peninsula, inter-Korean relations, and labor and evironmental conditions, the ministry said.

The committee on outward processing zones, to be formed by government officials from South Korea and the U.S., will be launched one year after the South Korea-U.S. free trade pact comes into force, the ministry continued. The committee will convene once a year on a regular basis, and if both sides reach an agreement, the committee will convene more frequently, it said.

Please direct questions or comments to [englishhani@hani.co.kr]

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