S. Korea, U.S. to start FTA talks in Seoul

South Korea and the United States will embark on their second round of formal talks for a proposed free trade agreement next week, officials here said Friday.

Led by South Korea's chief trade negotiator Kim Jong-hoon and U.S. Assistant Trade Representative Wendy Cutler, 346 delegates from the two nations will explore the possibility of a free trade accord at the five-day meeting from Monday in Seoul, South Korea's Foreign Affairs and Trade Minister Ban Ki-moon said at a parliamentary committee.

"Based on consolidated statements made at the first round of talks, we plan to exchange concessions (during the second round of negotiations)," Ban told lawmakers. In a press briefing on Friday afternoon, South Korea's chief negotiator Kim said he was not expecting any significant progress to be made in the second round of talks because negotiations are still at an early stage.

"Our government's basic stance is that, if the U.S. requests are unacceptable, no settlement will be made," Kim told reporters.

"If our people don't accept the free trade deal with the U.S., the National Assembly won't ratify the accord." Both sides hope to wrap up the negotiations by the end of this year so the two nations can ratify a pact before U.S. President George W. Bush's authority to fast-track legislation expires in mid-2007. This special authority allows the Bush administration to negotiate a free trade pact without Congress having to approve amendments. For the U.S., a deal with South Korea would be the biggest trade pact since the North American Free Trade Agreement in 1994.

South Korea is the world's 11th-largest economy and the U.S. seventh-biggest trading partner. Two-way trade amounted to US$72 billion last year, with South Korea posting a surplus of $16 billion, according to the South Korean government figures.

At the first round of talks held in Washington last month, U.S. trade officials said progress had been made during the negotiations, while some sensitive issues for South Korea remained intact. After the first formal talks, Cutler told reporters, "We've clearly hit the ground running ... We were able in almost all the areas to develop what we call in the trade world a consolidated text."

She named intellectual property right trademarks, e-commerce and telecommunications as areas where notable progress could be made, for example by signing an agreement on non-discriminatory practices in e-commerce, eliminating customs duties on digital products and improving network access and transparency in telecommunications.

During the second round of talks, Seoul and Washington are expected to touch on difficult subjects such as agricultural goods and products made in an inter-Korean industrial complex in North Korea.

For South Korea, a pact with the U.S. means its heavily protected markets, particularly for agriculture and services, would be exposed to the world's most powerful economy.

For the U.S., an agreement with South Korea is part of its goal of strengthening its geopolitical presence in Northeast Asia, which has been coming under the growing influence of China's rising economic power.

One of the most contentious areas in the talks will be rice, experts say. While South Korea's Agriculture Minister Park Hong-soo has said the nation's rice market should be excluded from a free trade accord, U.S. trade officials have requested South Korea abandon its protective policy in this area.

Another major stumbling block will be products made in an inter-Korean industrial park in North Korea. South Korea wants the U.S. to accept goods made at the Kaesong industrial complex as South Korean products.

There are 15 South Korean companies making products as diverse as clothes and kitchenware at the experimental industrial area that lies just a few kilometers north of the heavily fortified demilitarized zone that divides the two Koreas.

South Korea expects a free trade accord with the U.S. would help boost inter-Korean business projects, but the U.S. has said the free trade accord will only apply to products made in the South.

On June 21, South Korea's Trade Minister Kim Hyun-chong said in a speech, "It's very important to discuss goods made in the Kaesong complex in such a way that the U.S. provides special tariffs for the products." However, U.S. negotiators have been pessimistic over the issue, saying a pact would only extend to goods from both nations, excluding North Korea.

"I don't have a lot to say on the Kaesong issue ... in our view the FTA covers the Republic of Korea and the U.S.," said top U.S. free trade negotiator Wendy Cutler in a statement posted on the U.S. Trade Representative Web site on June 5, when the two nations embarked on the first round of formal talks in Washington.

On July 5, the U.S. Ambassador to South Korea, Alexander Vershbow, said at a seminar in Seoul that the Kaesong issue is "complex," without elaborating. The ambassador's expression came hours after North Korea test-fired a barrage of short- and long-range missiles into the East Sea in defiance of stern warnings from the U.S. and Japan.

"A request for duty-free treatment for Kaesong-produced goods is a high-cost, low-payoff addition to the negotiating agenda ... and one that could put the entire initiative in jeopardy," the Institute for International Economics said in a June report regarding the proposed South Korea-U.S. free trade agreement. In order to begin the talks, the government of President Roh Moo-hyun has already granted the U.S. four key concessions, including reducing the quota on the number of screenings of domestic movies in local theaters, and allowing the resumption of U.S. beef imports after a ban due to mad cow disease outbreaks there.

At home, Roh, whose five-year single term will end in early 2008, is grappling with public discomfort at the thought of the proposed free trade accord with the U.S.

On Thursday, a poll by state-run KBS radio found that more than half of South Koreans have a negative view of their government's free trade talks with the U.S.

The poll of 1,000 adults showed that 52 percent said that if such an agreement with the U.S. were adopted their country would receive fewer benefits than its long-serving ally. In contrast, 27.4 percent of respondents said the proposed deal would see South Korea prosper more than the U.S..

Besides the tough negotiating outlook, the Seoul talks may be dogged by a number of protests by South Korean farmers and activists who are angry at the talks. Opponents vow to block the deal, however, arguing that it would threaten the livelihoods of farmers and factory workers if finalized.

More than 100,000 South Korean farmers and activists plan to stage protests starting Monday, said Park Seok-won, head of the Korean Alliance Against the Korea-U.S. FTA, a nationwide group representing 282 farmers' organizations,labor unions and civic movement groups. "Basically, we are going to hold rallies in a legitimate and peaceful manner," Park said in a telephone interview Thursday.

Asked about the response if police try to use excessive force to block their protests, Park replied, "We will be beaten if police beat us and continue our demonstrations." The protests will probably be closely watched because South Korean farmers and workers have been known to engage in militant confrontations in the past. Last December, Hong Kong police arrested nearly 1,000 South Korean farmers after violent demonstrations against a World Trade Organization conference there.

South Korean police are on high alert ahead of next week's free trade talks and have already banned the protesters from staging rallies at Gwanghwamun street in central Seoul and at the Shilla Hotel, the venue of talks.

On Thursday afternoon, Lee Taek-soon, chief of the National Police Agency, said in a forum in Seoul that he will take stern measures against illegal, violent demonstrations.

During the second round of talks, which run until July 14, some 100,000 police officers will be deployed around the clock, according to police officials.

In a move likely to further escalate tensions, as many as 100,000 union workers of the Korean Confederation of Trade Unions, one of two national labor umbrella groups, were planning to stage a partial strike next Wednesday, the Seoul Economic Daily reported on Tuesday.

In a statement released on early Friday, the government urged protesters to hold peaceful demonstrations, saying the planned anti-FTA rallies will undermine South Korea's external credibility.

Seoul and Washington set no official deadline for the free trade talks, and the two sides are scheduled to hold further negotiations in September, October and December.

Seoul, July 7 (Yonhap News)