October 1, 2007

 

Auto issue may threaten beef trade between US and South Korea

 

 

South Korea has said it would not budge on the auto provisions of the US-Korea FTA, further antagonising US sentiments on whether the FTA would be reached anytime soon.

 

South Korean Embassy Economic Affairs Minister Seok-young Choi, at a meeting of the Washington International Trade Association (WITA), said the country would not be renegotiating the automotive provisions some members of the US Congress and automakers demanded.

 

He charged that the US auto industry's demands are "unreasonable" and that it is seeking to blame the Korean government for its own problems, he charged. Unable to appeal to Korean preferences, and hampered by its legacy costs, the industry is seeking to blame the South Korean government for restricting access, he said.

 

He further added that the FTA contains unprecedented provisions, and is a "good agreement" for the US and for Korea.

 

Choi said he remains confident that the US Congress will pass the FTA.

 

South Korea aims to have the Korean National Assembly pass the FTA by Feb. 20, 2008 and would likely come after the December presidential elections.

 

However, the Bush Administration does not seem to be focused on advancing the Korea FTA, largely because of differences between President Bush and President Roo over North Korea, according to lobbyists seeking the approval of the FTA.

 

This US attitude thus dampens Korean interest in making the politically difficult decision to open its market more to US beef from animals over 30 months of age, analysts said.

 

However, Choi said there was the Korean government was willing to resolve the beef issue and denied that it was holding up the FTA.

 

The beef issue is delayed because of the recurrent cases of the non-conforming incidents in the past, Choi said, referring that previous violations of US beef shipments.

Although Korea earlier this year had set the end of September as a target date for the beef decision, Choi said there was no time line in effect. 

 

However, he expressed hope that the beef dispute could be resolved this year.

 

Choi stressed that before bilateral negotiations can take place, the Korean Advisory Committee on Animal Health and Quarantine must deliver its recommendations whether it is safe to do so.

 

Meanwhile, Acting Agriculture Secretary Chuck Conner last week said that Korea continues to be a "source of great frustration" on the beef issues, but the US would continue to press them

 

Under OIE guidelines, US beef is safe to consume. The organisation previously rated the US a country under controlled risk from mad cow disease. 

 

Myron Brilliant of the US Korea Business Council said the council believes the best opportunity for passage of the Korean FTA in the US will be in the March to June 2008.

 

However, he stressed the FTA will have little chance of passage unless the beef issue is resolved.

 

Steve Biegun, a former National Security Council aide and current Ford Motor Company strategist opposes the deal as the company has seen no indication that Korea has been willing to live up to earlier agreements to open its auto market to US exports.

 

At the panel, former Deputy Assistant US Trade Representative for Korea Amy Jackson, now a consultant with C & M International, pointed out that Korea is now negotiating an FTA with the European Union and that US businesses would suffer if EU companies could take advantage of lower tariffs than their US competitors because the US has failed to ratify its FTA with Korea.

 

Jackson noted that not everyone in the automotive sector opposes the FTA. GM is neutral, the auto parts industry has not come out against it, she said, while the auto dealers are in favour.