Reuters | 21 September 2010
South Korea certain of US trade deal by G20
By Doug Palmer
WASHINGTON (Reuters) -- South Korea is waiting for a U.S. proposal to resolve auto industry concerns over a free trade agreement but is confident of striking a deal before President Barack Obama arrives in Seoul in November for a Group of 20 summit.
"The discussions will be finished by November 10th, by the time President Obama is going to Korea. That is the instruction that the presidents made ... so it will be done," South Korea's ambassador to the United States, Han Duk-soo, told the Reuters Washington Summit on Tuesday.
While there is no date for talks to begin, U.S. Trade Representative Ron Kirk and South Korean Trade Minister Kim Jong-hoon will meet sometime "in the next six weeks," he said.
Han, a former South Korean prime minister, brushed off a suggestion that Seoul was waiting for the outcome of the U.S. congressional election on November 2 before jumping into the talks.
But he did not rule out the possibility of the two sides holding their discussions between the election and the G20 summit of major economies some 10 days later.
"That will depend on the two trade ministers," Han said. "They will see what will be the most efficient way to do that. So all possibilities may be open."
The two longtime allies signed the free trade agreement more than three years ago but it has languished because of tough opposition from the U.S. auto industry.
Ford Motor Co, in particular, has complained the agreement fails to tackle non-tariff barriers that it says have long kept American cars out of the South Korean market.
Ford and its supporters in Congress note the United States buys around 700,000 South Korean cars each year but sells only about 7,000 vehicles to its seventh-largest trading partner.
"The test of this agreement for Congress should be whether it corrects this huge trade imbalance," Steve Biegun, Ford's vice president for international government affairs, told Reuters in an e-mail.
"Yesterday, President Obama communicated a governing principle for all trading relationships. He said: 'You can't just sell to us, and we can't sell to you,'" Biegun wrote.
"We couldn't agree more that trade must be two-way and appreciate the president's commitment to making sure any trade agreement with Korea provides meaningful market access for American businesses and American workers."
PRESIDENTIAL PLEDGE
Obama opposed the trade deal with South Korea during the 2008 presidential campaign. But since taking office, he has promised to resolve problems blocking congressional approval.
At their last meeting in June in Toronto, Obama and South Korea President Lee Myung-bak pledged to reach agreement on how to move the pact forward by the G20 meeting in Seoul.
Obama also said he planned to submit the agreement to Congress by early next year.
Han, who has been on a 17-city U.S. speaking tour to promote the agreement, said he heard broad support from every U.S. business sector except autos.
South Korea will "very faithfully" respond to any concerns the United States raises when Kirk and Kim sit down, Han said.
But he said Obama and Lee used the word "discussion" -- not renegotiation -- to describe the process for resolving concerns about the pact.
"They used the word discussion because this is very sensitive politically, whether to reopen the negotiations or not," Han said.
He said the current pact contains a number of beneficial provisions for U.S. automakers. Seoul will immediately eliminate an 8 percent tariff on U.S. cars, while Washington will phase out its 2.5 percent tariff over three years.
WTO COMPLIANCE?
Han said the pact addresses a number of regulatory and tax issues that have impeded U.S. auto exports and has a "snapback provision" allowing the United States to reimpose its 2.5 percent tariff if South Korea is not living up to its end of the agreement.
"The prime concern for automakers now is that we should have some performance-related criteria," said Han, who traveled to Detroit, the heart of the U.S. auto industry, as part of his outreach effort.
In essence, U.S. automakers say "We understand you are taking such wonderful measures but if U.S. exports are not increasing it's meaningless for us," Han said.
Han saw huge potential for U.S. automakers to boost sales in South Korea.
"But I don't know if really we can find a very good measure on the basis of that kind of performance target. The WTO (World Trade Organization) strongly prohibits that kind of performance-related measure, including quota systems," Han said.
It also would be difficult for the two sides to make "substantial revisions" to the actual agreement, although it is possible that minor adjustments could be made, Han said.
South Korea fears the agreement could unravel if is opened up to major changes, especially as it moves through the U.S. Congress, he said.
(Additional reporting by Susan Cornwell, John Crawley and the Reuters Washington Summit team; Editing by Tim Dobbyn and John O'Callaghan)
