YONHAP NEWS

(News Focus) KORUS FTA likely to get boost following summit

By Park Sang-soo
SEOUL, Nov. 19 (Yonhap) -- The push for legislative approval of the pending free trade accord between South Korea and the United States could gain momentum following Thursday's summit between presidents Lee Myung-bak and Barack Obama, experts say.

   The free trade accord, known as the KORUS FTA, was signed in 2007, but its ratification by both countries' legislatures has been stymied by disagreements on auto and beef trade.

   After the summit, the third of its kind since the administration of U.S. President Barack Obama was inaugurated earlier this year, South Korean President Lee Myung-bak and Obama once again confirmed the economic and strategic importance of the free trade agreement and agreed to work on its progress.

   "The summit was business as usual, but their discussions will help the free trade accord gain fresh momentum toward legislative approval in both states," said Choe Nak-kyun, a researcher at the state-run Korea Institute for International Economic Policy (KIEP).

   "Their rhetoric was not that different from the past, but they are expected to find solutions or breakthrough to the stalled trade deal," he said.

   At their first and second summits in April and June, Lee and Obama agreed that the free trade accord could bring benefits to both countries and committed to working together to chart a way forward. They also stressed the importance of avoiding protectionism and economic nationalism.
But Obama stressed during Thursday's press conference that several issues still needed to be worked out before Congress can ratify a free trade agreement with South Korea, implying the U.S. wants to resolve an auto trade imbalance with Asia's fourth-largest economy.

   "There is obviously a concern in the United States around the incredible trade imbalances over the last several decades." Obama said.

   In response, Lee raised the possibility of further talks on bilateral auto trade. "If the U.S. thinks there is a remaining issue over the auto sector, we are ready to discuss it again because we have also forged an FTA with the European Union, one of the world's biggest auto-producing regions," he said.

   Lee's comment represents an apparent about-face by Seoul. Previously, South Korea has opposed any renegotiation of what would be the biggest U.S trade pact since the 1994 North American Free Trade Agreement.

   "President Lee's stance may signal South Korea is willing to resolve issues related to the accord, and at the same time, he is calling on Obama to take a more aggressive' position on the ratification issue," Choe said.
South Korean Trade Minister Kim Jong-hoon and other officials have reiterated that Seoul will not revise the text of the deal itself, though some U.S. officials are reportedly hoping to address the concerns via side agreements.
As to Lee's comments, Kim said the U.S. has yet demanded renegotiations, or additional discussions on the issue.

   The Democrat-controlled Congress has expressed concerns that its ratification will undermine support from U.S. trade unions, a key political base, due to possible job cuts amid the worst recession in decades.

   U.S. Representative Sander Levin, chairman of the House Ways and Means Committee's trade panel, said earlier South Korea first must remove tax and regulatory obstacles to sales of U.S. autos, refrigerators and other manufactured goods.

   U.S. officials have complained about a tax on engine displacement that U.S. automakers claim hurts sales of their products, and numerous non-tariff barriers to trade in the sector not addressed in the deal.

   "Even though U.S. automakers have complained about the deal, they did not officially reveal what they want to change or revise," said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics & Trade. "U.S. automakers are losing their competitiveness in the Korean market not because of regulations."

   Some analysts said there could be some progress but expect little breakthrough in the two-way trade deal.

   "The thing is that U.S. Congress still appears to be negative about the deal," said Chung In-kyo, a professor at Inha University. "It will depend on how the Obama administration will persuade Congress to approve the deal."

   The accord, if it takes effect, will boost South Korea's economic growth by 6 percent over the long term and help create 340,000 new jobs, according to KIEP.

   The U.S., the world's largest economy and South Korea's second-largest trading partner, conducted US$84.7 billion in two-way trade last year.

   Since the two reached their trade deal, South Korea has struck other trade deals with the European Union and India.

   sam@yna.co.kr
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