[Update 2: Well, as it turns out, the two sides did reach an agreement, although it’s not clear how comprehensive. Both sides — mainly us — made major last-minute concessions. Talks were ongoing until minutes before the legal deadline. Beef tariffs will be phased out over 15 years, which is a long time. (We’ll see if the Koreans actually accept the next shipment.) Korea also gets to protect its rice market. There’s really only one bright spot I can see: “Both sides have agreed to immediately eliminate import tariffs on passenger cars … South Korea also accepted a U.S. demand to restructure its tax rates based on engine displacements.” I’m guessing this will be better for Korea than for Detroit. Now the really bad news:
In what appeared to be an unusual compromise, Washington agreed with Seoul to hold further negotiations on a South Korea-developed industrial complex in North Korea. Seoul has pushed for the treatment of goods produced in the Kaesong complex in the North Korean border city as South Korean-made products, but Washington has been against it.
In the statement, the two sides left room for the country of the origin issue to be solved in their future negotiations by designating it a “built-in agenda.” [Yonhap]
It’s an outrage that we’re even considering this. These are slave-made goods, it’s illegal to import them, and we know it.
I don’t have any other details on the agreement. I think the deal on cars is significant, and the rest, not so much. As for how comprehensive this deal is, I’ll wait for more information. Presuming this has met the U.S. fast-track deadline, the ball is back in the court of the Korean Confederation of Trade Unions and the Korean National Assembly. It’s an election year, so the fact that an agreement has been reached doesn’t mean the deal is sealed. We may even see demands to renegotiate, although on balance, it sounds like Korea got most of what it wanted. All of this presumes that there won’t be significant opposition right here in the United States.]
[Update: As of 8 p.m. Washington time, according to Yonhap, talks are still ongoing, although no one really knows why. Without some hope of achieving something, you’d think they’d have quit by now. My guess is that they’re going for some kind of scaled-down deal that will be an FTA in name only, but which will allow everyone to say they’ve reached “an” agreement.]
Talks on a proposed U.S.-South Korean free trade agreement have failed to reach agreement after a year of negotiation, and after being extended for another 48 hours after the last deadline. It’s not yet completely clear if this means they’ve failed, period, because the two sides are still talking, but without the most unlikely of concessions from the South Korean side, there will not be a free trade agreement worthy of the name this year.
Thus has a small radical movement influenced by North Korea paralyzed the trade policy of one of the world’s largest export economies.
It is the second deadline that has gone by in the search for what would be the largest U.S. trade pact in 15 years. The first was on Saturday and the second 1 a.m. on Monday in Seoul (1600 GMT on Sunday).
“They’re still meeting because there are issues left to be discussed,” a South Korean official told reporters as the second deadline expired. He declined to say if the talks were nearing a deal. [Reuters, Jack Kim]
South Korea’s discourse on this issue follows each new low with another one, and another.
One protester against the proposed free-trade agreement set fire to himself on Sunday near the central Seoul hotel which has been the venue for the final round of talks over the past week.
The 56-year-old man was taken to hospital where he was in critical condition with third-degree burns.
South Korean officials have said the most contentious issues were agriculture, including beef and oranges, autos and textiles.
In the past few days, U.S. leaders have been loudly pressing their demands that South Korea open its tightly protected market to beef and autos. With the increasing likelihood that the FTA will miss the fast-track deadline, you can expect Democrats in Congress to inflict the death of a thousand cuts on any agreement once it’s reopened for amendments. The failure of this agreement could be of far greater long-term significance in U.S.-Korean relations than the USFK drawdown or differences over North Korea. Trade policy should have filled the gap left by the drawdown of our outdated military presence in Korea. Still, there will be other opportunities, and I’m actually glad, on balance, that the FTA looks set to fail this year. We’ll probably get a better agreement a year or two from now, and one hopes that this development will discredit anti-American demagogues in this election year.
Let’s look back at Seoul’s leadership on an agreement that would have been an enormous boon to South Korean manufacturers and consumers, and which it one saw as Roh Moo Hyun’s last chance at some kind of accomplishment to water down his legacy of appeasement, alienation, and national insecurity. As you read this chronology, keep in mind that most of those opposing the FTA probably supported Roh, a leftist himself, in the 2002 election he narrowly won.
February 7, 2006: A key House staffer suggests that without an FTA, South Korea could be drawn into the economic orbit of China, already Korea’s largest trading partner.
April 9, 2006: FTA talks get off to a bad start. Before a media audience, the leaders of South Korea’s negotiating team tell junior team members to watch out for clever flying CIA microphones made up to look like dragonflies. Yes, this is for real.
April 10, 2006: Leftist opposition to the FTA begins to coalesce in earnest, despite analyses showing that if the FTA passes, “[o]verall U.S. GDP is expected to increase by 0.2 percent, while Korean production is expected to increase by 0.7 percent….” Radical firebrands compare a proposed FTA to a treaty used by Japan to occupy Korea, and claim that the FTA would make Korea “the 51st state.” The radical and often violent Korean Confederation of Trade Unions, whose rhetoric is often indistinguishable from North Korea’s, emerges as the core of opposition to the FTA. Despite its long history of violence, the KCTU receives government funding.
April 16, 2006: Anti-FTA protest draws 8,000 protestors carrying signs heavily laden with anti-American and nationalist slogans. A former Roh economic aide says, in reference to the United States, “it is no use making peace with a scoundrel.” I predict that the FTA talks will fail:
Under these circumstances, let me humbly suggest that the FTA is as good as dead for this year. The question is how badly this whole thing will end …. The long-term interests of the United States might just be best served by quietly ending the FTA talks now, or maybe in a couple of weeks after the issue is fully joined, but before things get too ugly.
May 5, 2006: Polls show that most South Koreans still support a free trade agreement with the United States.
May 9, 2006: The far-left, anti-American, North Korean-infiltrated Korean Teachers’ Union tours Korean schools, telling the kids that an FTA means that they will be “brainwashed” by American ideology in the form of such films as “Batman” and “Superman.”
June 5, 2006: South Korean protestors hold a small and rather silly anti-FTA protest in Washington, but at least no one gets hurt this time.
July 10, 2006: Roh’s government privately concedes that products made in North Korea’s Kaesong Slave Labor Camp will never be accepted as “South Korean” for FTA purposes. (The State Department has applied the term “forced labor” to Kaesong, and the Tariff Act does not permit such goods to be landed in U.S. ports.)
July 13, 2006: 25,000 violent anti-FTA protestors take to the streets of Seoul, wielding iron pipes and bamboo poles, and hurling paving stones. The mob turns its fury upon a group of “Americans,” who turn out to be Swiss.
July 15, 2006: ROK government’s approval rating hits 14%, mostly because of the lousy economy, high housing prices, high unemployment, and the government’s failed North Korea policy.
July 27, 2006: The Trade Ministry tries to hold a town meeting on the FTA, only to be shouted down by an anti-FTA mob.
July 29, 2006: Too late, the ROK government realizes that Ameriphobes have dominated the FTA debate, and does too little to promote the agreement’s potential benefits.
August 21, 2006: Kaesong seems to be the issue that just won’t die, so U.S. Trade Representative Susan Schwab speaks bluntly on the idea of including Kaesong products in the FTA: “It won’t happen, it can’t happen.”
October 27, 2006: The Chairman of South Korea’s National Intelligence Service resigns following the exposure of a well-connected North Korean spy ring that had infiltrated the vehemently anti-FTA Democratic Labor Party, maneuvered itself into a leading position in the anti-American protest movement, tried to influence the Seoul mayoral election, plotted violent attacks against political opponents, and put at least one likely agent onto a U.S. Army base. One of the arrested spies is a former senior KCTU official. Some opposition newspapers suggest that President Roh replaced the Chairman to stop the investigation from coming too close to his own administration.
November 23, 2006: Another big anti-FTA rally.
November 29, 2006: Kang Soon-Jeong, who had led violent anti-American and anti-FTA protests, is arrested on suspicion of being a North Korean spy.
January 17, 2007: FTA talks are still bogged down over exceptions the South Koreans demand: antidumping laws, automobiles, beef, rice, citrus fruit, and pharmaceuticals. Kaesong intermittently reemerges as an issue.
March 31, 2007: FTA talks miss their first deadline for fast-track approval. Anti-American presidential candidate Kim Geun-Tae goes on a hunger strike to protest the FTA. (Here’s a scene of Kim dancing for the amusement of the North Koreans at the Kaesong Slave Labor Camp a few days after North Korea’s nuclear test.) In the United States, where the FTA has been off the political radar screen, Nancy Pelosi begins calling South Korea’s trade policies “one-sided” and compares Korean protectionism to an “iron curtain.”
April 2, 2007: Talks miss their second deadline, which had been extended for 48 additional hours. A protestor sets himself on fire to protest the FTA.