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The US-Korea Free Trade Agreement How to Promote Your Interests
Amy JacksonC&M [email protected]: (202) 624-2501F: (202) 628-5116
March 2006
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Agenda
Overview of the US Government’s FTA Policy:Things to Watch
What is needed for Success of the US-Korea FTA?
What You Can Do
The U.S.-Korea FTA: How to Promote Your Interests
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FTAs are here to stay, so make the best of them
Competition for scarce resources
Short time to negotiate complicated deal
Politics, Politics, Politics
Things to WatchThe U.S.-Korea FTA: How to Promote Your Interests
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US Free Trade Agreements: 12 CompletedThings to Watch: FTAs are here to stay
Since 1985
Israel NAFTA Jordan Singapore Chile Morocco
Recently Concluded
Australia (Feb 2004) CAFTA-DR (Aug 2004) Bahrain (Sep 2004) Oman (Oct 2005) Peru [Andean] (Dec 2005) Colombia [Andean]] ( (Feb 2006)
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US Free Trade Agreements: 11 ProposedThings to Watch: FTAs are here to stay
Middle East
Egypt
Kuwait
Saudi Arabia
Qatar
Latin America
BoliviaMercosur
Europe
Switzerland
Asia-Pacific
ASEAN JapanTaiwan PhilippinesIndonesia New Zealand
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Korea (Launched February 2, 2006)
Malaysia (Launched March 8, 2006)
Thailand
Ecuador
Panama
South African Customs Union (SACU)
UAE
FTAA
US Free Trade Agreements: 8 OngoingThings to Watch: Competition for Scarce Resources
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The Role of Trade Promotion Authority (TPA)Things to Watch: Short time to negotiate a complicated deal
TPA grants the President the authority to negotiate international trade agreements that cannot be revised by Congress, but can only be approved on an up-down vote. This was previously known as “fast-track” authority
The President’s TPA lapsed in 1994 but was renewed in 2002. Since then, the US has passed 6 FTAs under TPA rules.
After being extended in 2005, TPA is set to expire on July 1, 2007. The Administration’s goals is to conclude all FTAs currently under negotiation by March 31, 2007: Korea, Thailand, Malaysia, UAE, Ecuador, SACU, FTAA.
COMPREHENSIVE TPA requires specific consultations with
Congress on agriculture, fish and shellfish, textiles, trade remedies, etc.
EXTENSIVE CONGRESSIONAL INVOLVEMENT
The Executive Branch maintains extensive dialogue with Congress
throughout the process
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Politics, Politics, PoliticsThings to Watch
US-Korean elections local national
US domestic debate on Trade developments on DDA developments related to other FTAs developments related to TPA expiration
Squeaky wheels
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What is needed for success of the US-Korea FTA?The U.S.-Korea FTA: How to Promote Your Interests
Macro-level Factors US-Korea FTA— “Too Big to Fail?”
Presidential Approval/Involvement
Comprehensive in scope
No Foreign Policy Blow-ups
No FTA issue becomes “Too hot to handle”
Congress/National Assembly
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General US Goals and Desired OutcomesWhat is needed for success of the US-Korea FTA?
Geostrategic Commercial Political
Does the FTA partner cooperate with the US on foreign affairs and security issues?
Will the FTA contribute to other Administration objectives in the region?
Will the FTA be comprehensive and bring commercially meaningful benefits to US farmers, businesses and consumers?
Does the US business community support the FTA?
Does Congress support the FTA?
Will FTA negotiations help resolve existing bilateral issues of concern?
The US-Korea FTA is the “Perfect Storm”
Is it “Too Big to Fail”?
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Korea is: The world’s 10th largest economy
7th largest U.S. Trading Partner
6th largest market for U.S. ag exports
Top U.S. Exports to Korea
Top 5 U.S. Imports from Korea
Electric Machinery, Sound/TV equipment, etc.
Electric Machinery, Sound/TV equipment, etc
Nuclear reactors, boilers, machinery
Autos
Organic chemicals
Nuclear reactors, boilers, machinery
Optic, photo and medical instruments
Mineral fuel, oil, etc.
Aircraft, Spacecraft and Parts thereof
Iron and Steel Articles
$27.6 billion in 2005
$43.8 billion in 2005
The U.S.-Korea FTA will:
Be the largest U.S. FTA since NAFTA in 1993
Have huge commercial implications for virtually every sector
Economic BenefitsWhat is needed for success of the US-Korea FTA?
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Approval/Involvement at the highest level
“An FTA with Korea will provide important economic, political, and strategic benefits to both countries and build on America's engagement in Asia.”
February 2006
Korea is a large and advanced economy.
Korea is an important ally of the US.
The FTA more firmly establishes US in Asia in light of China’s growing economic influence.
What is needed for success of the US-Korea FTA?
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“It is essential that we conclude an FTA with the United States for the future of our economy.’’
January 2006
“We must not allow any domestic interest groups to foil the negotiations…we should be aware that the negotiations could fail depending on the terms of the negotiations. For it is possible that there may be an ultimate condition that we could not yield to.”
March 2006
“The purpose of the FTA is to enhance competitiveness” and “lead us to a world-class economy.”
The FTA strengthens alliance with US.
“The Korea-U.S. FTA is a matter of pride for the Korean people.”
Approval/Involvement at the highest levelWhat is needed for success of the US-Korea FTA?
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FTAs Are Comprehensive
Market Access [tariff reduction] [
Textiles and Apparel
Rules of Origin
Customs Administration
Sanitary and Phytosanitary Measures
Technical Barriers to Trade
Safeguards
Government Procurement
Investment
Cross-Border Trade in Services
Financial Services
Telecommunications
Electronic Commerce
Intellectual Property Rights
Labor
Environment
Transparency
Dispute Settlement
What is needed for success of the US-Korea FTA?
Typical FTA Chapters:
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Macro-level FactorsWhat is needed for success of the US-Korea FTA?
Wild Card: No Foreign Policy Blow-Ups
Six Party Talks
US military “incidents”
Other
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Wild Card: No FTA Issues Become “Too Hot to Handle”
Korean Side
Macro-level FactorsWhat is needed for success of the US-Korea FTA?
Reactive based on events in Korea
Private sector views on outcome of negotiations
US “must haves”/ “must not haves”
Sugar in CAFTA What (if anything) will “IT” be in US-Korea FTA?
Korean “must haves”/ “must not haves”
Protestors? How many / How vocal / How extreme
Rogue ministries Refusal to negotiate?
Inflammatory Press
Pre-presidential election politics
Korean Side Throughout the Process US Side Primarily at the end of the Process
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Issues of interest to Korean industry are not well-known
Political Issues
→ Movement of Natural Persons (visa issues)
→ Kaesong Industrial Complex
→ Anti-dumping Rules
Issues “Too Hot to Handle”What is needed for success of the US-Korea FTA?
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The US Visa Waiver Program (VWP) Issues “Too Hot to Handle”
“The U.S. will work with the ROK to develop a visa waiver program roadmap to
assist Korea in meeting the requirements for membership in the program. Korea's
interest in participating in the VWP reflects our strong bilateral partnership and will contribute to enhance exchanges and
mutual understanding.”
President BushNovember 2005
A major issue for business To respond to the increased demand for visas, Congress established the VWP in 1986.
VWP allows citizens from designated countries to enter the US for short periods of time without the required visitor’s visa.
Over time it has expanded to encompass 27 countries, including five Asia-Pacific nations: Australia, Brunei, Japan, New Zealand and Singapore.
Red tape in visa applications is costing business opportunities between Korea and the U.S. Even the tiny nation of Andorra, which hardly has any trade with the U.S, is included among the 27 countries whose citizens do not need a visa for shorter trips to the U.S.
Representative Diane Watson (D-CA) February 2006
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Wild Card: Congress (and National Assembly)
Recent hearings Effect of FTAs on Autos Labor issues
Role of Korea Caucus
TPA Expiration
Lessons learned from CAFTA
Macro-level FactorsWhat is needed for success of the US-Korea FTA?
Don’t underestimate their role. Let them know you care throughout the process.
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What You Can Do: Role of individual companiesThe U.S.-Korea FTA: How to Promote Your Interests
Develop a Comprehensive Outreach Strategy NOW
1 Don’t underestimate your ability to influence
2 Watch developments carefully
3 Take advantage of opportunities—Think Strategically
4 Be Vocal—Make your needs known throughout the process
5 Be good sales people
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Don’t Underestimate Your Ability to Influence What You Can Do
Executive Branch
(President & Agencies)
Congress
Private Sector
Korean Government
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Watch developments carefully What You Can Do
Closely monitor:
Developments related to the FTA text Press coverage Congress/National Assembly activities Time constraints
Have Early Response strategy ready
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Take advantage of opportunitiesWhat You Can Do
This will be more comprehensive than past US FTAs
Possible areas for expanded commitment include:
USKFTA will also set a higher bar for future US FTAs
Think strategically and realistically
AUTOS PHARMAGOVERNMENT
TRANSPARENCY
POSTAL INSURANCE
OTHERS?
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Be vocal—Develop and frame requests carefully What You Can Do
Things to consider:
YES NO
Is there such a thing as “over ambitious”? NOTE: In FTAs, USG must consider “defensive” concerns
Can issues be resolved in context of FTA negotiations but Outside of actual FTA text?
What kind of phase-in can I accept?
What “evidence” can I put forward to support my opinion?
Is there any link to Roh policies or plans?
Can I enlist any domestic support?
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Make sure both the US and Korean governments understand YOUR needs and priorities
Be vocal What You Can Do
Submit Written Comments
Utilize the Media
Meet with Government Representatives
Reduce costs and operational risks
Protect and grow Your market share
Increase yourbottom line
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The Office of the U.S. Trade Representative:
There are many opportunities for businesses to participate in the process
Frequently consults with Congress
Seeks Public Comments
Holds Public Hearings
Consults with Advisory Committees
Works with ITC, other agencies on Studies/Reviews of Effectsof FTAs
Economic Employment Labor and environment
Be vocal What You Can Do
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Be vocal—Meet with government representatives and others
What You Can Do
Leverage all available resources throughout the process
Work both sides—frequently
Cast a wide net
Congress (National Assembly) will be key but also go beyond the “usual suspects”
Package your requests carefully
Be as specific as possible
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February 2, 2006 Official launch of KUFTA negotiations
February 9, 2006 USG FR notice out requesting public comments
March 14, 2006 Public Hearing on KUFTA
March 24, 2006 Public comments on KUFTA due to USTR
April 17, 2006 Public comments on labor rights due to Dept of Labor
April 20, 2006 ITC hearing on probable economic effects of FTA
April 27, 2006 Public comments on economic effects of FTA due to ITC
June 5-8, 2006 First round of negotiations in Washington
July 10-14, 2006 Second round of negotiations in Seoul, with subsequent meetings every 6-8 weeks
December 31, 2006 Target date for concluding KUFTA negotiations
March 31, 2007 Real “drop-dead” date for concluding KUFTA negotiations
July 1, 2007 Trade Promotion Authority Expires
Be vocal What You Can Do
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“We fully support this Administration’s decision to launch FTA talks with Korea. Korea is the United States’ seventh-largest trading partner in terms of two-way trade and fifth-largest market for U.S. agricultural goods…Moreover, as the bilateral economic relationship is strengthened through an FTA, this will also
strengthen the critical political relationship between our two countries.” -US–Korea FTA business coalition, a coalition of over 75 companies and associations representing industry, agriculture, and services sectors
“The [National Association of Manufacturers] NAM has been the leading advocate for a free trade agreement with Korea, and we are enormously pleased by today’s announcement…An FTA with Korea
would be a big deal for U.S. manufacturers…The United States exported $24 billion of manufactured goods to Korea last year alone. That number would grow substantially with an FTA and both the American and Korean economies would benefit considerably.”-John Engler, President, National Association of Manufacturers
“The Food Products Association strongly supports the free international trade in food and agricultural products… South Korea is our sixth largest trade partner in terms of agriculture, representing a $2.5. billion export market for U.S. agricultural products…For the United States, An FTA would provide U.S. food companies with increased access to the South Korean market, as well as new opportunities for processed foods and beverages. We commend U.S. Trade Representative Rob Portman for his efforts to promote free trade, and we applaud his work to reach an agreement with South Korea to facilitate the growth in trade between our two nations.”-Cal Dooley, President and CEO, Food Products Association
"The Electronic Industries Alliance (EIA) commends the Bush Administration and Ambassador Portman for beginning the process necessary to create a new trade agreement in the Far East -- the U.S.-Republic of Korea Free Trade Agreement (FTA). Launching these talks with an economic partner and ally such as South Korea can help the U.S. high-tech industry and other businesses expand the $73 billion trading market there.”-Dave McCurdy, President and CEO, Electronic Industries Alliance
Be vocal—Utilize the media What You Can Do
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Be Good Sales People—Develop a comprehensive outreach strategy
What You Can Do
Help Negotiators understand your issues Touch base often Prioritize Provide succinct background papers on issues that are difficult to understand
Identify and capitalize on common interests Work together to develop “themes” that cut across sectors
Packing is everything: Develop a comprehensive outreach strategy! Provide evidence to support your position How is what you want good for Korea [U.S.]? How does it fit within Roh Administration’s [Bush Administration] goals? Are there synergies between US and Korean private sector interests (i.e. Visa Waiver Program)? Use neutral 3rd parties to support your position
Don’t underestimate the value of face-to-face meetings
Togetherness is best Stay on message Differences will be exploited.
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Federal Register Notice on KUFTAhttp://frwebgate/access.gpo.gov/cgi-bin/multidb.cgi
USTRhttp://www.ustr.gov
US-Korea FTA Business Coalition http://www.uskoreafta.org
Other Resources What You Can Do
Congress—Find your Representativehttp://www.house.gov/htbin/wrep_findrep
Korean Economic Institute (KEI) FTA Resource Center http://keia.org/4-1-fta.html
US Department of Commerce http://www.doc.gov
http://www.export.gov\fta