hankyoreh

Nov. 9. (Photo by Park Jong-shik)

By Jung Eun-joo

Top trade officials from South Korea and the United States met again Wednesday to fine-tune the details on auto provisions and other pending issues of the South Korea-U.S. Free Trade Agreement (KORUS FTA). South Korean Trade Minister Kim Jong-hoon and his U.S. counterpart Ron Kirk reportedly reached an agreement on major issues during the two-day renegotiation that was initially scheduled to end on Tuesday. Both are scheduled to finalize the talks on Wednesday.

Observers of the ongoing renegotiations, however, have voiced concerns that as in 2007, negotiations have become misguided. They have pointed to missteps of South Korea’s renegotiations in June 2007 in accordance with demands by the U.S. Congress following the conclusion of the KORUS FTA on April 2 of that year, and the Lee Myung-bak administration’s decision to permit full-scale import of U.S. beef in April 2008, the latter causing nationwide candlelight vigil demonstrations. In this case, observers say the Lee administration has concluded renegotiations with the United States by unilaterally accepting a plan full of concessions without getting the opinions of those whose interests are at stake.

Despite major changes to the content of the agreement, the Lee administration decided to enact an “additional agreement document” without changing the existing agreement. In order to relax environmental and safety standards on U.S. automobiles, both parties must amend the appendix of Chapter 9, and to put a ceiling on customs refunds for completed Korean cars for export, both must amend the appendix. Both nations, however, reportedly agreed not to make any changes to the original treaty. They may have decided to enact additions, rather than change the text of the agreement, because Trade Minister Kim pledged on June 30 that South Korea would make no further changes.

The greater concern voiced about the additional agreement document is that it sets a precedent that might enable second and third agreements in the future to change the existing agreement in accordance with U.S. demands. Currently, 25 members of the U.S. House of Representatives’ Textile Caucus have openly called for changes to the FTA’s articles on textiles.

Lawyer and trade expert Song Gi-ho said, “The government’s negotiations goal not to change the existing document led to the emergence of an irregular method to change the agreement.” Song went on to say, “It has proven once again that the participation and control of the National Assembly is a necessity during trade talks with the United States or EU.”

In moving forward with the renegotiations, the United States Trade Representatives (USTR) took several weeks to get the opinion of the U.S. House of Representatives, the auto industry and labor sector. South Korea’s Office of the Minister of Trade, however, has pushed renegotiations without gathering opinions from stakeholders in South Korea or the National Assembly. The Korea Automobile Manufacturers Association has asked about the talks in order to formulate measures, but it has received no response.

Foreign Minister Kim Sung-hwan gave a brief update on the direction of the KORUS FTA negotiations to the lawmakers of the National Assembly’s Committee on Foreign Affairs, Trade and Unification three hours before Trade Minister Kim’s first press briefing. Parliamentary aides were not permitted to attend, and only Democratic Party lawmakers Kim Dong-chul and Choi Jae-sung were able to attend. Trade Minister Kim’s briefing lasted just six minutes.

Article 21 of the regulations for passing free trade agreements requires the minister of trade to report the progress of negotiations to the National Assembly and to regularly explain progress to stakeholders and the public to assess opinions.

Others say the other issue with renegotiations is that if South Korea lowers the environmental standards for U.S. cars is changed, they are required to extend the same benefit to the EU.

The concessions highly favorable to the U.S. in the auto agreement have led some to pinpoint this as the most disadvantageous for South Korea. South Korea’s auto import tariffs are three times higher than those of the U.S. Factoring in the effect of the reorganization of the individual consumption tax (formerly the special consumption tax) and car tax, the sales price of exported U.S. cars will become 13 percent cheaper. The requirement for onboard diagnostic emissions testing systems has been waived, and consumers may choose between South Korean and U.S. safety standards.

Observers have also called the “snap back” clause, a special means to resolve conflicts related to the auto industry, a toxic article with little precedent in trade treaties elsewhere in the world. In contrast, the USTR has boasted that it is an unprecedentedly strong system.

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