Reuters | Sunday, November 21, 2010
US may have to trade agri for autos in Korea trade deal
- South Korea says ‘give-and-take’ needed for deal
- US won’t say if it’s willing to make new concessions
WASHINGTON: US farmers hoping for increased sales to South Korea under a free trade agreement may get less than they expected because of President Barack Obama’s demand for better terms for US automakers.
South Korea had originally hoped to resolve US concerns over autos and beef without reopening the deal signed by the two countries in June 2007.
But this week, South Korean Deputy Trade Minister Choi Seok-young said limited “give-and-take negotiations” on the pact are inevitable because of proposed changes requested by the United States in the talks.
South Korean negotiators are expected in Washington soon after the two sides failed to wrap up the agreement when Obama was in Seoul this month for the Group of 20 Summit.
US trade officials have refused to say what changes they are asking South Korea to make to the agreement, but it is thought that they are seeking a longer phase-out for US car and truck tariffs than was agreed in 2007.
That could slow the pace of increased South Korean automotive sales in the United States under the pact.
Washington also has pressed South Korea to accept US mileage and emission standards for cars to remove an impediment to US sales in the South Korea market.
Some US lawmakers also want changes in investment, labour, financial and other provisions of the pact.
Looking for concessions: South Korean officials say in order to sell any changes to their public and legislature they would need the United States to make offsetting concessions.
The most likely option is that South Korea would ask to “pull back” some of the trade openings it previously agreed to give the United States, said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics.
That could include commitments South Korea made in the agricultural section of the pact, where they already carved out special treatment for rice, oranges, potatoes, honey, skim and milk powder, evaporated milk and certain soybeans because of domestic resistance to opening those markets.
A spokeswoman for US Trade Representative Ron Kirk declined to say if the United States was willing to make any additional concessions in return for improved auto terms.
Both sides “are having a difficult time figuring out what the options are, given the damage that was done in Seoul” by not sealing a deal, Schott said. “They’ve created a real mess.”
South Korean officials also warn that they cannot agree to lift remaining restrictions on imports of US beef because of the political sensitivity of the issue.
Ten of thousands of South Koreans took to the streets in protest after President Lee Myung-bak agreed in 2007 to lift restrictions on US beef imposed after the discovery of the first case of mad-cow disease in the United States in 2003.
The public fury was quieted only after US industry agreed to ship beef only from cattle not older than 30 months, which is considered the least risky. Under that agreement, the United States has recovered much of its lost sales.
If the United States pushes South Korea too hard to accept a complete reopening at this time, Seoul could walk away from the pact, one South Korean official said.
