Washington: The administration of US President George W. Bush warned that a failure to strike a free trade agreement with South Korea could damage American relations with East Asia.
The warning came on 20 March as US lawmakers threatened to reject an agreement that does not include the opening up of South Korea’s sensitive rice market and removal of non-tariff barriers to America motor vehicles.
The US and South Korea, a key Asian ally, are racing ahead of a 31 March deadline to strike what could be the biggest free trade agreement (FTA) since the 1993 North American Free Trade Agreement.
“Any let-up in focus that results in our inability to complete agreements with major emerging-market economies like South Korea could have unfortunate consequences,” Deputy US Trade Representative Karan Bhatia told a congressional hearing Tuesday on the free trade talks with South Korea.
“It would likely result in a shift of the region’s attention from strengthening their relationships with the US to doing deals with other major trading partners,” he said.
To date, the US has concluded two East Asian free trade agreements -- with Singapore and Australia, important but smaller economies -- in the region critically important to the United States.
Bush’s powers to fast-track trade agreements expire in June, giving US negotiators up to 31 March to present a deal for a mandatory 90-day congressional review that would then only be subject to an outright yes-or-no vote in Congress without amendments.
Bhatia said that a successful free trade pact with South Korea could provide an “important boost to US efforts to remain an active economic presence in a strategically vital” East Asia region.
The region, he said, accounted for more than 37% of total world gross domestic product, 26% of global trade flows and 29% of US exports.
A South Korea-US FTA would establish a “model” that could be replicated with other Asian economies and help the US expand trade liberalization throughout the region, Bhatia said.
But US lawmakers criticized their negotiators Tuesday for not doing enough to prise open the South Korean market, warning that they would not settle for any half-baked agreement.
“We need a shift in negotiating strategy -- to an active, results-oriented approach that demands and measures commitments by the Korean government,” said Sander Levin, chairman of the powerful House of Representatives ways and means trade subcommittee which examines issues of globalization and trade.
The Democrat was particularly critical of South Korea’s current non-tariff barriers to American industrial products in general and automotive products in particular.
The US was saddled with an 11-billion-dollar deficit in auto trade with South Korea, or 82% of the total deficit, he said, adding that South Korea sold 700,000 vehicles in America last year while only 4,000 units were sold there by the US.
Ranking Republican lawmaker Wally Herger said US rice exports were subject to a harsh quota system and other restrictions in South Korea and demanded that the Asian nation “put rice on the negotiating table so that our farmers can put their rice on Korean dinner tables.
“This FTA must have comprehensive product coverage, including meaningful access for rice. Anything less would be a terrible disappointment,” he said.
Herger also urged US negotiators to reject any offer from South Korea to allow US beef access only in exchange for US abandonment of its rice demands.
“The exclusion of either rice or beef from this important agreement will risk congressional passage,” he warned.
South Korea insists it will maintain trade barriers on rice and other sensitive items.
It has also rejected US beef shipments after finding tiny bone fragments in them, saying it violated an agreement last year that lifted a three-year ban imposed to keep out mad-cow disease.
Washington accused Seoul of using the fragments as a pretext to exclude its beef and to protect local farmers.