’China next on Korea’s FTA agenda’

By Kim Da-ye

Ask Trade Minister Kim Jong-hoon what are the origins of “hallyu” or the Korean wave and he would argue that it goes back farther than heartthrob Rain and that it owes more to Richie Valens, the U.S. singer of such hits as La Bamba, Kim’s favorite, not excluding the unlimited supply of American pop songs.

“There was no screen quota or record quota,” Kim said during a recent interview with The Korea Times, explaining that unrestricted movement of goods was the key to the blooming of the Korean version of the “British Invasion.” The screen quota is a system to guarantee certain viewing days for Korean movies to protect them against Hollywood movies and the record quota was his analogy regarding pre-iTune era records and CDs.

Kim said that was the power of free trade, stressing that there is no more time to waste in promoting a free trade agreement (FTA) with China before it gets more sophisticated and makes striking a deal with it even more time-consuming. Kim, Korea’s top trade negotiator came off as a minimalist in his promotion of free trade, obviously skipping to mention the likelihood that the record of La Bamba he listened to was pirated with little copyrights enforced.

“I want to emphasize that as China keeps growing, so will the degree of difficulty in making a deal with the country,” Kim said, adding that China is also enthusiastic about removing trade barriers.

He said that Koreans easily made quite good money running businesses in China five years ago, but that’s no longer the case.

Considering China’s cheap farm and industrial products, there seems to be more threats than opportunities in removing barriers in trading with the country.

Kim explains that China senses the same threats from opening up its market, especially for sectors it wants to protect and foster including chemicals and high-tech industries.

China is also sensitive about altering the existing system — for instance, boosting transparency and opening up its services sector.

Kim said that the threats felt by both countries will help smooth out differences by giving each the leverage to negotiate.

“It is a huge opportunity that such a big country is neighboring us. We should keep it alive,” Kim said, quoting an economic theory that the bigger the counterpart’s economy is, the more benefits the free trade pact would bring.

Other than the China plan, Kim’s team is nearly closing a free trade deal with Australia and is in talks with Canada.

While beef imports are an issue in the Korea-Canada free trade agreement (FTA), Korea’s dairy industry remains wary of the pact with Australia.

Kim, however, sees Korea’s opportunities in Australia’s mineral resources.

“More than 70 percent of mineral resources are imported from Australia. In order to get more self-sufficient, we need to invest and develop there. The process is all related to the FTA,” Kim said.

The government may appear aggressive in pushing forward free trade pacts with too many countries, but Kim said Korea’s trading is less liberalized than the world’s average.

He said that World Trade Organization (WTO) statistics show about half of global trading involves no tariffs while only a quarter of Korea’s trading is free from barriers.

When the Korea-U.S. (KORUS) FTA is ratified, the portion would reach 35 percent, Kim said. With the Chinese deal, the figure would go up to 50 percent, meeting the global average.

Right now, however, much of Kim’s attention is devoted to the ratification of the KORUS FTA.

The U.S. House of Representatives passed on Sept. 7 the renewal of the Generalized System of Preferences program, which is considered to be the first step in the ratification of the KORUS FTA.

Further, U.S. Trade Representative Ron Kirk hinted Monday his optimism for the trade deal to pass Congress before the Asia-Pacific Economic Cooperation meeting in November.

Korea’s National Assembly has maintained that the FTA will be submitted to the plenary session when its U.S. counterpart makes a clear move to ratify it.

Kim, who closely monitors the situation in the U.S., positively said the KORUS FTA will take effect on Jan. 1, 2012, as scheduled.

He said that both the Senate and the House of Representatives have finished an unofficial review of the KORUS FTA without additional objections.

“Lawmakers here claim that the FTA hasn’t been submitted in both Korea and the U.S. But the cases aren’t the same. In the U.S., in fact, the deal has been made. Once the FTA is submitted, it will be processed considerably fast,” Kim said.

As the nation’s top negotiator who led the KORUS FTA talks and oversaw various deals including the free trade pact with the European Union, Kim is often asked what makes a good negotiator.

He keeps an answer simple. Building up trust is crucial, and one has to be clear in saying yes or no.

“If you need five, ask for 10 and get five, that’s a skill,” Kim said. “But you should avoid promising something that is unlikely to happen. If you make a difficult promise and do not keep it, that’s fraud. Answering ‘yes or no’ clearly is very important.”

Kim also mentioned good judgment as a key skill for negotiations. When the counterpart attacks, one shouldn’t be taken aback, but make a quick, impromptu decision to take a break and think it through.

“You got to have some guts for that,” Kim added.

The trade minister said that negotiation between individuals and that between countries are very different with mutual benefits more significant to the latter relationship.

“If one person back-stabs and manipulates another, they can just end their relationship. Between countries, they cannot decide not to see each other again, so countries end up reaching a win-win deal,” Kim said.