Time Running Out for FTA with U.S.

○ Tension Rising

Experts say Korea’s National Assembly should ratify the free trade agreement with the United States ahead of the U.S. Congress, during an extra month-long parliamentary session starting Jan. 28.

They say ratification of the deal should come before Korea’s parliamentary elections slated for April 9, citing that the United States could delay the process due to the November presidential election.

Congress should ratify the agreement before July at the latest. Considering the 90-day ratification process, Washington should submit the deal to Congress no later than March. To meet the due date, Seoul should first complete ratification in February and initiate pressure on Washington for a rapid process.

The situation might turn worse if Washington fails to ratify before the November presidential election and if a Democrat gets elected. Democratic candidates Hillary Clinton and Barack Obama are strongly opposed to the agreement.

As the situation grows tense, Seoul has gotten jittery over the agreement and expressed worry over an unfavorable outcome.

Yoon Young-gyu, chief of the domestic free trade agreement office, said, “Seoul has gone all-out to explain the agreement’s ratification to the National Assembly and promote it to the media. The figures in charge of the deal have individually persuaded lawmakers every week.”

“Their efforts have paid off, as the lawmakers submitted ratification. If the new administration starts by not ratifying the deal, we have to start the whole process over from the beginning.”

A government official also said, “If ratification falls into the hands of the next National Assembly, Korea could get stuck in a quagmire. There is also worry over the potential failure of the agreement itself.”

○ Ratification to Determine Economy’s Fate

“Deferment and cancellation of the Korea-U.S. free trade agreement will have an ill effect on Korea’s economy, foreign credibility and bilateral relations,” said Ahn Choong-young, a professor at Chung-Ang University in Seoul. “The fundamental frame of the government policy on striving to become an advanced trading nation might crumble.”

A report by the Korea Chamber of Commerce & Industry last year said Korea will suffer an opportunity cost of 15.2 trillion won if ratification is delayed a year.

If ratification is postponed, the next administration must conclude negotiations with the National Assembly, when it should put more effort into drafting strategies and creating a framework for national administration.

To make matters worse, the agreement and other economic negotiations might not be high on the agenda of the next administration, and thus failure to reach a conclusion is possible.

“Countries trying to reach a free trade agreement with Korea usually do so to advance to the U.S.,” said Choi Nak-gyun, chief researcher at the Korea Institute for International Economic Policy. “If ratification fails, the countries might cast doubt on negotiations with us.”

Economic circles are urging immediate ratification of the agreement. Members of a non-governmental committee on the deal, including Federation of Korean Industries Chairman Cho Suk-rai and Korea International Trade Association Chairman Lee Hee-beom, visited the National Assembly last week. They told lawmakers that it will be easier to persuade Congress if Korea ratifies the agreement first, asking for ratification within the next parliamentary session.

Economists from both countries issued a joint statement at an academic conference in Hawaii that both sides must ratify within the first half of the year.

○ Urgent Solution Needed for Beef Imports

Opening the Korean market to American beef is a major barrier to ratification. Seoul permits only meat from cattle aged younger than 30 months, but Washington wants all restrictions lifted on American beef before ratifying the agreement.

The import of U.S. beef has become a test for Korea to open its market. To complicate the matter, ratification must be approved by Montana Senator Max Baucus, who is also chairman of the Senate Finance Committee. His state is nicknamed the “Beef Belt” since it mass-produces the meat. Moreover, since beef is produced throughout the U.S. mainland, it is impossible to ratify the agreement while banning American beef.

The presidential transition committee of President-elect Lee Myung-bak has devised plans to resolve the problem, but the results have bore little fruit.

The Agriculture and Forestry Ministry suggested to the committee recently that adding a clause on prohibiting animal feed to the agreement might lift the restriction on cattle age. The committee rejected the idea, however, saying the United States will not accept that.

Experts are urging both countries to take a more lenient stance on the opening of the Korean beef market, and devise better strategies by resuming high-level talks.