G20, FTA and N. Korea
By Tong Kim
The G20 in Seoul heralded a symbolic rise in South Korea’s global leadership. South Korea implemented an impressive, near perfect plan for the conference. The host country’s emphasis was to ensure an efficient conference organization, providing watertight security against any possible terrorist attacks, sabotage or disruptions, and assisting seamless facilitation of the agenda.
For months before the actual event took place, the banners saying, ``We pray for a successful hosting of the G20 conference” were hung on many tall buildings in Seoul. It was not clear what ``a successful hosting” was supposed to mean but it certainly inferred a trouble-free conference for two days without terrorist attempts, without North Korean provocations, and without unpredicted accidents. The prayer was answered; there were no major disruptions, and no traffic havoc due to the closed streets around the conference sites.
On substantive matters, the real issues were how to end the ``currency war” or the competitive devaluations and to fix disproportionate trade imbalances ― between China and the United States for example ― in an effort to seek a balanced, sustainable growth of the global economy. The Seoul consensus produced a broad statement of principles pointing to the right direction to address these issues, but the difficult details are to be worked out later.
And there is no assurance that the 20 economies with increasingly divergent economic interests would agree on ``indicative guidelines” and other specifics by the agreed deadline of June 2011. Nor is it certain how such an agreement will impact the intricately interdependent global economy afterwards.
South Korea takes pride in its contributions to the G20, as it adopted Seoul’s initiatives, supported by the United States and Canada, on the ideas of ``global financial safety nets” and a development program for underdeveloped countries. On the other hand, the Seoul government seemed to play excessive G20 public relations to its domestic audience.
For the United States, the G20 in Seoul reflected a decline of influence over other giant exporters like China and Germany. The Fed’s quantitative easing seemed to have worked against the Obama administration’s stance on the currency issue. The United States failed to secure G20 agreement to limit foreign reserve holdings and trade surpluses by its trading partners. It also failed to use the G20 forum to press China to raise its undervalued currency as a means of reversing the U.S. trade deficits.
Unlike in the past, the United States no longer can dictate other nations to agree on U.S. initiatives or positions. The failure of the Korea-U.S. Free Trade Agreement (KORUS) was another example showing the limits of U.S. influence even with its ``strategic” ally. Ironically, now Washington seems to need the KORUS to create jobs at home and increase exports abroad, more than Seoul that has already reached an FTA with EU to go into effect next year.
Obama and Lee Myung-bak had agreed to conclude the negotiation of the remaining differences on autos and beef by the opening of the G20 in Seoul. President Lee had in fact decided not to accept the U.S. request on certain FTA terms even before he met with President Obama on November 10. Apparently, the reports that Lee and Obama had received were not good enough for ``a win-win” situation.
The FTA negotiators will resume their unfinished business in coming weeks in Washington, where it might be easier for them to reach some sort of agreement acceptable to their respective political leadership. Maybe it was not a good time during the G20 for President Lee to agree on the KORUS, which is strongly opposed by the opposition parties. An FTA agreement could have jeopardized the positive effect of the successful hosting of the G20 conference for domestic consumption.
On the sidelines of the G20, the leaders of the two allies also discussed their approaches to the denuclearization issue, but without disclosing any significant shift in policy. They are still on the same page. Although President Lee seemed to have dropped the requirement of a North Korean apology for the Cheonan as a condition to the resumption of nuclear talks with the North, the South still requires an apology to engage the North in any serious inter-Korean dialogue. This way Seoul may not be blamed for interfering with the restarting of the talks.
Both Seoul and Washington have long called on the North to stop belligerent behavior and get serious about its commitment to denuclearization. Obama said there would be an appropriate time to restart the six-party talks, if the North Koreans show ``a seriousness of purpose” that they are ready to move forward on the path to denuclearization in return for benefits. But, Washington also keeps the condition of an improvement in inter-Korean relations for talks with the North. In other words, there would be no nuclear talks, without a North Korean apology for the Cheonan incident. This is like a rhetorical paradox of delinking for relinking.
The North is saying that they are ready for talks, but they will wait until the United States and South Korea are ready. Pyongyang has not dropped its own conditions for talks ― lifting of U.N. sanctions and a U.S. commitment to discuss a peace pact. The North Koreans deny their involvement in the sinking of the Cheonan, and they insist that their WMD programs are for self-defense. Few believe the North will negotiate its nuclear arms away. Everybody is waiting for others to move first, but nobody is moving.
In the meantime, the North Korean nuclear activities continue in the mist of concerns that the North might export some of its nuclear materials. A recent U.N. report alleged that North Korea was selling $100 million a year in banned weapons, nuclear equipment and missile parts to Iran, Syria and Myanmar. There have been reports that the North began building a small size light water reactor. The issue will only become more dangerous and more difficult to deal with, as the parties keep waiting. What’s your take?
Tong Kim is a research professor with the Ilmin Institute of International Relations at Korea University and an adjunct professor at Johns Hopkins University's School of Advanced International Studies (SAIS). He can be reached at firstname.lastname@example.org.