Korean Job Discussion Forums

[regicide]

S. Korea Issues Free Trade Deal Warning
Monday March 26, 8:24 am ET
By Kelly Olsen, AP Business Writer
South Korea Warns That Potential Free Trade Agreement With U.S. May Collapse Over Rice Market


SEOUL, South Korea (AP) -- South Korea warned Monday that negotiations to reach a free trade agreement with the United States under a deadline just days away could fail if Washington pushes to include rice in the deal.

"The negotiations may collapse if the FTA fails to meet our expectations or the U.S. demands rice concessions, which our side cannot accept," Kim Jong-hoon, Seoul's chief negotiator, told reporters as the two sides began a round of high-level talks aimed at clinching a deal. "We made it clear we will deal resolutely with such a situation."

Seoul and Washington need to wrap up an agreement by March 31 due to various legal requirements related to the approaching end on July 1 of U.S. President George W. Bush's Trade Promotion Authority, which allows him to send trade agreements to Congress for straight yes-or-no votes without amendments.

The tight schedule has forced the two sides to turn the talks over to higher-ranking officials after Kim and his U.S. counterpart, Assistant U.S. Trade Representative Wendy Cutler, failed to reach an agreement in talks last week in Washington.

Their bosses, South Korean Trade Minister Kim Hyun-chong and Deputy U.S. Trade Representative Karan Bhatia, opened the latest effort earlier Monday.

"We had meetings pretty much nonstop since this morning," said Bhatia, who refused to reveal details or offer a progress report. Kim Hyun-chong did not speak to reporters.

South Korea, the world's 10th-largest economy, has said since even before the negotiations formally began in June last year that it would demand that its rice market, which it considers a "sensitive sector," be excluded from any final deal.

Chief negotiator Kim Jong-hoon, a dapper South Korean trade diplomat with the rank of ambassador, described the talks Monday as taking place in a "serious and tense" atmosphere.

He also reiterated Seoul's demand that goods manufactured at a joint industrial zone it backs in North Korea be included in the deal, a stance Washington has said it will not accept.

Besides agriculture, other contentious issues remaining to be solved include trade in automobiles, in which the United States is in sizable deficit.

U.S. manufacturers sold 5,795 vehicles in South Korea in 2005, while South Korean makers such as Hyundai Motor Co. and Kia Motors Corp. sold 730,863 vehicles in the United States, according to Commerce Department figures.

South Korea is the seventh-largest trading partner of the United States, and the two countries do more than $75 billion (euro56 billion) in trade a year.

If successful, the deal would be the biggest for Washington since the North American Free Trade Agreement in 1993.

The two governments say a deal to cut tariffs and other barriers would increase trade and boost economic growth. Opponents in South Korea fear an influx of cheaper U.S. goods would harm livelihoods and cost jobs.

About 100 demonstrators rallied Monday outside the venue for the talks -- a luxury hilltop hotel -- and accused South Korean leaders of betraying the national interest.

"The free trade negotiators are just like those who sold out Korea to the Japanese 100 years ago," said veteran activist Oh Jong-ryul.

Japan ruled the Korean peninsula as a colony in 1910-1945, and the issue of Koreans who collaborated with the Japanese remains contentious in South Korea.

On Sunday, 7,000 people took to the streets of Seoul to denounce the proposed deal, culminating in a rally in front of the U.S. Embassy.

Associated Press Writer Kwang-Tae Kim and AP photographer Jin-Man Lee contributed to this report.

[Thunndarr]

[mindmetoo]

Expanded access to (currently) the single greatest market for manufactured goods on the planet? The problem is? Free trade has been a huge bonus for Canada. The trucks shipping product south are literally backed up at the US border day and night.

[Kuros]

The tariff on rice is 1000%. Why is this never reported?

[jaganath69]

[mack4289]

If the Korean government wants a way to prove that the rice market isn't as sacred as they assume, look at what Japan did:

http://times.hankooki.com/lpage/opinion/200412/kt2004120618565554120.htm

"Looking at Japan, Japan used the same argument that its rice was a unique product with cultural and sentimental value as well as an economic one. It is not like automobiles or television sets. The whole country must produce rice at any cost and rice farmers should be protected at all costs. The dates are different, but Japan went through similar negotiations and similar time schedules to delay the opening of its rice market.

Japan did open its rice market and did it ahead of schedule. Before the set date that its MMA should be 8 percent, Japan imported more than 8 percent. Japan used a so-called tariffication by calculating the required tariff rates to make sure the necessary MMA would be satisfied. Japanese rice farmers and more importantly Japanese policy makers must have realized that Japan could not compete in rice production in the global economy. In order to sell more of its automobiles and electronics, Japan asked foreign countries to open their markets for those products in exchange for it opening its rice market. Though domestic rice farmers suffered, it was not a bad strategy.

Many rice farmers suffered and left rice farming for good. Although less rice was produced, the price of rice went down in Japan because of increasing imports and reduced price support by the government. The gap between domestic and world rice price has been going down steadily. Of course the Japanese government helped rice farmers get other jobs and supplemented their income. Japan correctly anticipated and realized that the country would be better off in the long term by abandoning its uncompetitive rice farming."

[regicide]

[Wrench]

They don't want to give up rice yet they want Commie produced crap to be in the FTA.. Does Korea know that they are dealing with USA?

If USA feels its geting screwed it will just hike the tarrifs on those exported cars from the lowest to highest.

[mindmetoo]

[jinju]

The US should threaten to impose high tarrifs on Korean cars and electronics. Screw the rice farmers.

[freethought]

[jinju]

[regicide]

[Octavius Hite]

You;re right, it is about a lot more than rice and cars. It seems at least to me that the Koreans are angling for open access to the usa but none in return.

Rice will not be open becuse the Koreans signed a deal with ASEAN that said the Korean market would open in 2014 to Australia, Vietnam, China, and others. If they open up to the US early they would have to open early to everyone.

The cars, beef and Kaesong is foolish and I think Korea will lose those fights.

As for the movies, I don't care if they have screen quotas because the internet has made that all but irrellevant.

[thepeel]

As much as it pains me to say it, the US will not retaliate in the event of a total FTA negotiations collapse. If the FTA fails, all will go back to normal, likely.

The US has a long history of using trade policy to economically link her vassal states to the mother economy. This is why the economic situation is the way it is today, with Korea and Japan.

The Koreans may hate that they are fully dependent on the US market, but they can not deny it. Nor, can they change it in the near future. A trade war with Korea would push the Koreans into the Chinese sphere of influence and alter the balance in the region deeply. This would be a terrible situation for Japan, who is the real gem in the American purse.

The Koreans need an FTA because their economy is about to die. They cannot compete with the Chinese. Here are some stats.

In China, a Hyundai plant produces 68 cars/hour. 300,000 a year. The base salary is 360$/month and "belong to a workers' organization whose main task seems to be to encourage harder effort rather than push for higher wages. The average worker age is 26" According to the FT (Monday, March 19, 2007)

"By contrast, at Hyundai's main Ulsan plant the workers, their average age is 41- earn $4,850 a month, build only 55 cars an hour, refuse to produce more than three models on each production line, will not allow second shifts (which would eat into their overtime) and are heavily unionized. Last year, a 25day strike cost Hyundai about 7,800 cars for a 127,000,000$ loss."
Also from the FT.

Korea needs to change into a service economy. This will only happen with liberalism, union-busing (hard) and free trade with the United States, Japan and others. South Korea simply cannot add 4000$/month worth of extra value to her manufacturing sectors when compared to the Chinese. South Koreans also need to get over their very immature mercantilist attitude and their deep xenophobic feelings. It is not a good place to do business, to live or to work. They have zero comparative advantage beyond protecting their own firms for domestic consumption. But those firms need outside profit to survive, and China will undercut that profit unless the firms relocate out of Korea. This is will bring the system down.

It is over. The Koreans need to adapt or fall.

The article I quoted is called "Seoul Sleepwalk" and is behind a firewall. www.ft.com