FTA Renegotiation
Korea Should Not Send Wrong Signal to US
The future of the South Korea-U.S. Free Trade Agreement (FTA) has taken a new twist since last week's summit between President Lee Myung-bak and his American counterpart Barack Obama. Lee said in a joint press conference with Obama in Seoul on Thursday that Korea is willing to ``talk'' with the United States about the latter's concerns on potential damage to the American auto industry from the enactment of the trade deal. His remarks have immediately sparked speculation that Seoul has offered to renegotiate the FTA with Washington.
Korean officials were busy dismissing the speculation. On Friday, Cheong Wa Dae ruled out the possibility of holding renegotiations of the FTA between the two countries. It even said that Korea will raise its own concerns should the U.S. demand any change to the deal which was signed in June 2007. Such concerns are apparently about market openings in the domestic agricultural sector.
Foreign Minister Yu Myung-hwan also said that the government will not renegotiate with the U.S. on the FTA. He told lawmakers at the National Assembly that the President was not referring to a renegotiation but was taking an ``offensive'' stance on the U.S. for raising issues with the FTA's auto provisions. We have to point out that Lee was not careful in his remarks which might have sent the wrong signal to the Obama administration and the Democrat-controlled Congress which is reluctant to ratify the FTA.
Lee had better not go beyond his agreement with Obama on the FTA. Lee said, ``President Obama and I reaffirmed the economic, strategic importance of the South Korea-U.S. FTA, and we agreed to move forward on the deal together.'' This was enough for Lee to convey Seoul's intention to call on Washington not to delay further in pushing the FTA through Congress. But Lee went a little bit too far in implying that his country is ready to address U.S. concerns.
As officials explained, President Lee wanted to express his willingness to listen to the problems with the American automobile industry. However, even if that is the case, Americans could interpret Lee's remarks as indicating that South Korea would accept repeated U.S. calls for renegotiation of the FTA to correct what they call unfair, at least in the auto trade.
According to media reports, the Office of the U.S. Trade Representative (USTR) plans to come up with a new package on the auto industry after consulting with Congress. The U.S. may use the package to launch a formal renegotiation of the FTA with Korea. Besides, Rep. John D. Dingell, D-Michigan, reportedly submitted a draft resolution to the House of Representatives last week that calls for a halt to ``unfair'' auto trade between Korea and the U.S.
U.S. lawmakers, trade officials and automakers need to think what's really causing an imbalance in the bilateral auto trade. They must realize that the imbalance is the direct result of the American auto industry losing competitiveness, not South Korean trade barriers. It is doubtful that a possible modification of the FTA will successfully fix this. Opening renegotiation talks on the FTA is also feared to set a bad precedent which could be seen as Washington's trade pressure on Seoul. We hope the two sides will smoothly address this sensitive issue in order to bring prosperity to both countries through freer trade.