| South Korea–United States Free Trade Agreement | |
|---|---|
| Hangul | 한·미 자유 무역 협정 |
| Hanja | 韓美自由貿易協定 |
| Revised Romanization | Han-Mi jayu muyeok hyeopjeong |
| McCune–Reischauer | Han-Mi chayu muyŏk hyŏpchŏng |
The Republic of Korea-United States Free Trade Agreement (also known as KORUS FTA) is a trade agreement between the United States and the Republic of Korea. Negotiations were announced on February 2, 2006, and concluded on April 1, 2007. The treaty was first signed on June 30, 2007, with a renegotiated version signed in early December 2010.[1][2] The agreement was passed by the United States on October 12, 2011 with the Senate passing it 83-15[3] and the House 278-151[4]. It was ratified by the National Assembly of South Korea on November 22, 2011, with a vote of 151-7, with 12 abstentions[5].
The treaty's provisions eliminate 95% of each nation's tariffs on goods within five years, and also create new protections for multinational financial services and other firms.[2] The treaty would be the United States' first free trade agreement (FTA) with a major Asian economy and its largest trade deal since the North American Free Trade Agreement (NAFTA) in 1993. For South Korea, this will be the second largest FTA following the one signed with the European Union,[6] dwarfing those signed in recent years with Chile, Singapore, the European Free Trade Area and the Association of Southeast Asian Nations (ASEAN).[7]
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Although the treaty was signed on June 30, 2007, ratification of the agreement stalled when President George W. Bush's fast-track trade authority expired and a Democrat-controlled U.S. Congress expressed objections to the treaty related to concerns over bilateral trade in automobiles and U.S. beef exports. Nearly three years later, on June 26, 2010, President Barack Obama and President Lee Myung-bak expressed renewed commitment to the treaty, stating that they would direct their governments to resolve remaining obstacles to the agreement by November 2010.[8] After discussions at the November 2010 G-20 Seoul summit and further intensive negotiations in early December 2010 in Maryland, Presidents Obama and Lee announced on December 4, 2010, that a deal had been reached; they subsequently signed an updated version of the agreement.[2][9][10][11][12]
The December 2010 deal represented a compromise between the two sides. Significant concessions were granted to the U.S. on trade in automobiles: tariff reductions for Korean automobiles were delayed for five years, and U.S. autos were granted broader access to the Korean market. At the same time, the negotiators agreed to set aside disagreements over U.S. beef exports for the time being. The deal was supported by Ford Motor Company, as well as the United Auto Workers, both of which had previously opposed the agreement. Remarking on the UAW's support, an Obama administration official was quoted as saying, "It has been a long time since a union supported a trade agreement" and thus the administration hopes for a "big, broad bipartisan vote" in the U.S. Congress in 2011.[12] At the time of its December 2010 announcement, the White House also published a collection of statements from a wide range of elected officials (Democrats and Republicans), business leaders, and advocacy groups expressing support for the KORUS FTA.[13]
Soon after being signed by the US President George W. Bush and his South Korean counterpart, Roh Moo-hyun, there were rumors of a possible re-negotiation of the text, citing possible opposition by the US Democrats. However, Kim Jong-Hoon, South Korea's chief negotiator for the 10-month talks that brought the present FTA, denied such rumors assuring journalists that "The deal has been done and that's it. There will be no renegotiations." Kim's comment came after his American counterpart, Wendy Cutler, the assistant US trade representative for Japan, Korea and APEC Affairs and chief negotiator of the KORUS FTA negotiations, indicated that the Democrats may demand amendments in the labor area.[14]
On September 16, 2008, U.S. Commerce Secretary Carlos Gutierrez asked the US Congress to ratify the Korea-U.S. free trade treaty as soon as possible, arguing that "trade creates more jobs and boosts economic growth". He called on the U.S. Congress to swiftly approve pending trade deals with Colombia and Panama.[15]
The Grand National Party is currently weighing pros and cons in anticipation of the National Assembly’s ratification of the Free Trade Agreement between South Korea and the United States. At a meeting of its top council held October 2 at GNP headquarters in Yeouido, GNP leadership expressed divergent opinions. Party chairman Park Hee-tae and supreme council member Chung Mong-joon sided with the argument for circumspection. Park said that it was first necessary to establish a plan for farmers and fishermen negatively affected by the signing of the South Korea-U.S. FTA, and suggested discussing the issue of passing the FTA after looking at the government’s countermeasures. But leaders within the National Assembly of South Korea are arguing for an early resolution of the matter. Floor leader Hong Joon-pyo is reported to have said that the United States could propose renegotiations in the area of automobiles, which they feel is disadvantageous to themselves, following the election, and that it is necessary to finalize approval of the FTA ratification before the U.S. election and place pressure on the United States.[16] On October the 1st, a South Korean trade official declared that a free trade deal with the United States is unlikely to be ratified within the year given the political climate there.[17][18] On October the second, it was announced that the Korean side "had completed all procedures for parliamentary ratification". The trade bill will be submitted to the National Assembly next week," Lee Hye-min, deputy minister for the FTA, told reporters.[19] The Korean ambassador to the United States, Lee Tae-shik met with U.S. Congressmen more than 300 times to persuade them to ratify the FTA, which is facing objection from the Democrats, who had a majority in both the US House of Representatives and the US Senate.[20]
After the opposition party backtracked on their agreement to negotiate the FTA, to a more hardline stance, The ruling Grand National Party could potentially ratify the Free Trade Agreement alone in the parliament.[21]
Former bureaucrat of the Ministry of Economy, Trade and Industry and current professor of Kyoto University, Dr. Nagano Takeshi (中野剛志), had negatively perceived the South Korea–United States Free Trade Agreement as a "poisonous dumpling" through his the October 24th, 2011 Diamond.jp article.[22][23][24]
The former chief of the Public Relations in the Blue House Cheon Ho-seon (천호선) protested against the government for adding the ex-president Roh Mu-hyun as a contributor of the current FTA in a pro-government FTA advertisement.[25]
The Seoul Administrative Court has officially decided to release approximately 300 translation errors of the free trade agreement-related documents to public on December 2, 2011.[26]
Lee Jeong-ryeol (이정렬), the chief prosecuting attorney at the Changwon District Court in Gyeongsangnamdo criticized this free trade agreement through his Facebook account in which it caused concerning reactions from the judicial scene.[27]
There is a judicial movement to establish a special task group to speculate of a possible renegotiation of the agreement.[28][29]
Fifteen anti-KORUS FTA university students were arrested in front of the Blue House fountain on December 10, 2011.[30]
There are both adherents and opponents to the FTA. Opponents argue that rice remains excluded, much to the chagrin of Korean rice exporters, and South Korea has been given ages to eliminate other agricultural tariffs such as that on US beef. In return, however, Washington hopes to get sufficient preference in this market – and to keep out rival suppliers – to sell the deal to its farming lobby.
The agreement also says little about services, a U.S. strength and its chief focus in many a bilateral negotiation. They also complain that Korea has long been accustomed to believe that it has an absolute right to sell cars, computers and ships around the world, while providing Korean high-cost farmers with levels of subsidy that make even the EU's farm payments seem mean.[31] During 2008, some U.S. lawmakers opposed the free trade deal with South Korea, citing an imbalance in auto trade. They also wanted more steel shipments to South Korea.
On September 28, the U.S. Chamber of Commerce's Vice President of Asia and President of the U.S.-Korea Business Council Myron Brilliant highlighted how the current automobile trade imbalance between the United States and South Korea can be leveled by the US Congress passing the pending U.S.-Korea Free Trade Agreement (KORUS), adding that "it includes strong commitments by the Korean government to address virtually every tariff and non-tariff market access barrier to U.S. automobiles in Korea raised by the U.S. auto industry during the FTA negotiations.".[32] During the last half of 2008, U.S. officials have also expressed confidence that the trade deal will be approved once it is put to a vote during a lame duck session to be held after the Nov. 4 elections, which will help lawmakers avoid political risks during this sensitive election year.[17]
There are Presidential elections too. Though both John McCain of the Republican Party and Barack Obama of the Democratic Party have expressed commitment to the U.S.-Korea alliance, the Democratic Party reflects anxieties about globalization and renewed doubts about trade liberalization, which could jeopardize the Korea-U.S. Free Trade Agreement that has yet to be ratified. John McCain highlights the fact that Seoul and Washington would benefit economically from lowering trade barriers, including a $20 billion increase in annual bilateral trade, citing the Korea-U.S. trade deal as an example of the rewards of free trade in an era of growing economic globalization. The Democratic candidate Barack Obama opposed the KORUS FTA as `badly flawed' during his campaign, claiming it wouldn't do enough to increase U.S. auto sales. His criticism echoes the auto labor unions, which are fighting to defeat a trade bill that does nothing to redress the very problems they have complained of for years.[33] Obama has said he would vote against the FTA if it comes up for a vote in the U.S. Senate and would send it back to Korea if elected president. However, there is some hope that his threats are just election year talk. Obama had expressed similarly strong negative feelings about the North American Free Trade Agreement between the U.S., Canada and Mexico, even going so far as to threaten to unilaterally "opt out" of the three-nation agreement during campaign stops in industrial states during February 2008. However, his senior economic advisor Austan Goolsbee assured Canadian officials in a private meeting on February 9 that Obama's rhetoric was "more reflective of political maneuvering than policy.".[34]"
When President Obama committed to move the Korea FTA in 2010, Democratic members of Congress and Democratic-affiliated groups strongly criticized the decision. President Richard Trumka of the AFL-CIO said: “Our negotiators should go back to the table to address the imbalanced market-access provisions in the agreement and to revisit the flawed investment, procurement, and services provisions as well. President Obama promised a ‘smart, fair and strong’ trade policy. The KORUS FTA does not meet this standard, and we will work closely with the Administration and Congress to improve this agreement on behalf of American and Korean workers. Unless and until the agreement is amended to address these concerns, we will strongly oppose passage of the U.S.-South Korea trade agreement."[35] Meanwhile, Chairwoman Louise Slaughter (D-N.Y.) of the House Rules Committee said: “I am surprised that the Administration would try to slide this poorly written trade deal past the American public when Congress has already said that the deal is not good for our economy or workers… To try and advance the Korean FTA when so many workers are still struggling to find work would simply move our economy backward. This trade pact was written by a Republican Administration with the corporate bottom line in mind. The President has pledged to work hand in hand with Congress, but there are significant changes that must be made in order for this free trade agreement to gain broad Congressional support."[36]
Immediately following the passage of the South Korea–United States Free Trade Agreement in October 2011, certain companies and industry groups voiced their concern for the deal. According to the United States International Trade Commission, the American textile industry is expected to lose jobs as South Korean manufacturers make the same products at 15 to 20 below the cost to American manufacturers.Citing concern over American jobs, Allen E. Gant, Jr., the president and CEO of textile manufacturer Glen Raven, said “We are very much in favor of global trade, but we’re just not about having agreements that are unfair to the U.S. textile industry.[...]The U.S. needs every single job that we can get.” Others in the American textile industry, which has experienced a sustained decline for decades, stated that there was a lack of commitment by the U.S. government to preserve American textile manufacturing.[37]
The opinion of Koreans towards the FTA is divided, at least by sector. The Korea Institute for International Economic Policy estimates that exports to the United States will rise by 12% per year, or $5.4 billion, and grow by 15% in the longer run. However, the Korea Rural Economic Institute predicts that US agricultural exports to South Korea, currently $2.8 billion, could double after the FTA, causing the loss of up to 130,000 jobs.[7] Proponents of the FTA cite that it will create more jobs than the ones destroyed, and will be, on the long term, beneficial for the country.[38] Business groups welcomed the news that South Korea concluded the free trade agreement with the U.S. Business leaders stressed the importance of smoothly implementing the next steps, including ratifying the agreement in the National Assembly of South Korea.
Lee Hee-beom, the chairman of the Korea International Trade Association (KITA) declared that "This is our country's first step in its endeavor to join the group of advanced economies," adding that "the government should work out measures to compensate those who might suffer from the market opening and continue the restructuring process. The National Assembly should ratify the FTA as soon as possible so that the negotiations will show results quickly." Similar statements were made by the Federation of Korean Industries: "with the successful conclusion of the FTA talks with the U.S. as momentum, this agreement will upgrade the traditional alliance with the U.S. to a higher level, and greatly help our enterprises advance into the US". The Korea Chamber of Commerce and Industry said, "we should view the FTA from the broad standpoint of promoting national interests rather than the interests of specific industries or groups".[39]
Citizens' groups worried about transparency, the environment and labor standards say the deal was deficient as it was agreed on behind closed doors. The South Korean government, for example, has not allowed open, public debate about the FTA's impact on the nation's economy and sovereignty. The Korean Advertising Broadcasting Agency blocked the running of an advertisement produced by farmers protesting the deal.[40] "Should the FTA become law after an undemocratic process and in spite of mass popular opposition, the FTA will drive the perception in South Korea that America's democratic rhetoric is merely a cover for profit-seeking behavior," Korean Americans for Fair Trade said in a statement.[40]
There have been several massive protests against the FTA in the country. A nation-wide protest on November 22, 2006 was reported to have drawn 65,000 to 80,000 people, with 9,000 to 20,000 of them gathering at the city hall in Seoul. A protester named Heo Se-uk set himself on fire Sunday shouting "Stop the Korea-U.S. FTA" outside the hotel where negotiators were meeting.[41] He was being treated for third-degree burns, police said. The overall opinion of the population has fluctuated over time and is difficult to gauge. One poll in April 2007 indicated support for the Free Trade Agreement at 58.5%.[42] Other polls indicated a majority opposed to the agreement, including an 83% no confidence rating in the government's ability to negotiate the agreement.[43] The Lee Myung-bak administration has taken considerable political heat for its part in advancing the FTA, as did the previous Roh Moo-hyun administration. President Lee had to endure months of protests over the decision to reopen American beef imports, a decision that was made primarily with an eye towards securing American support for the FTA.[34]
Baek Il, professor of Commercial Distribution Studies at Ulsan College, protested against the free trade agreement as "a destruction of the South Korean domestic manufacturing industry" in 2006 and in 2011.[44][45]
“Korean laws make it difficult for foreign companies to outsource and offshore activities. These laws often relate to privacy (private data protection law and real name law). Under the Protection and Use of Credit Information Law and its Presidential Decree, foreign companies operating in Korea are prohibited from transferring any customer data whatsoever out of Korea, even for the purposes of processing data to their own affiliates. In addition, as a result of the revision of the Insurance Business Act in May 2003, it is mandatory for insurance companies to maintain in-house the basic human and non-human resources, including IT systems, necessary for insurance business. These restrictions seriously undermine the government’s goal of making Korea into a financial ‘hub’ by significantly increasing the cost of operating in Korea. These regulations should be modified to permit companies to follow their global operating models for outsourcing and offshoring provided they have existing practices to protect consumer information.”[49]
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