- The Washington Times - Tuesday, May 13, 2003

South Korean President Roh Moo-hyun, this week making his first visit to the United States since being elected, wants to convince business leaders that his country can become Northeast Asia’s business hub.

But first he has to convince investors that South Korea, geographically slightly bigger than Indiana and with a population of 48.3 million, is a safe place to invest.

Mr. Roh yesterday rang the opening bell at the New York Stock Exchange and toured ground zero, site of the World Trade Center terrorist attacks, as a prelude to his meetings tomorrow on the North Korean crisis with President Bush.

The visit to the stock exchange was seen as a move to appease powerful business interests who complain that strident anti-Americanism in his country has led to an anemic stock market and a drop in foreign investment.

Mr. Roh plans to push the message that strategically located Korea is safe, becoming more open and more investor friendly.

Mr. Roh’s administration has also worked to shore up the country’s credit rating with major Wall Street agencies like Moody’s Investor Service and Standard & Poor’s.

Moody’s in March affirmed South Korea’s debt outlook but said tension on the Korean Peninsula would pressure the country’s ratings because of increased risk of military conflict.

In some ways, South Korea’s economy has been a model for the region, having rebounded from the 1997-98 Asian economic crisis and showed strong growth.

But its economic growth is expected to slow significantly from last year’s 6.3 percent rate, and the stock market has dropped about 28 percent from a year ago. Foreign companies are less willing today to invest in South Korea.

“I think a lot of that has to do with the North Korea situation,” said Leslie Griffin, executive director of the U.S.-Korea Business Council, an independent business group based in Washington.

The group has outlined a number of issues that would open South Korea’s doors to more trade and investment, with local labor laws and relations leading the way.

“I would be surprised if he doesn’t address labor issues,” Miss Griffin said.

The labor system is too rigid, not allowing companies the flexibility to hire, fire and transfer employees, the business council said in a March set of recommendations to Mr. Roh’s government.

South Korea is the United States’ sixth-largest export market. Two-way trade reached $58.2 billion in 2002, a slight increase from 2001.

The United States accuses South Korea of using high tariffs and taxes or illegal subsidies. Cars, which face an 8 percent tariff when entering Korea, are one major problem, according to a U.S. trade representative’s report.

The two sides meet quarterly to discuss trade of automobiles, agriculture, telecommunications and pharmaceuticals. They also discuss the subject of intellectual property rights, a U.S. trade official said yesterday.

The U.S.-South Korea trade relationship is not as contentious as it was 10 or 15 years ago, Marcus Noland, a senior fellow with the Institute for International Economics, a Washington think tank, said in a paper released this month.

But while trade and investment between the United States and South Korea have been growing, the two sides are becoming less important to each other economically as China plays a growing role in the trade relationship and consumes more political and economic attention, he said.

“The net result may well be a decoupling of relative interests that could reinforce the widening strategic differences” between the United States and Korea, Mr. Nolan wrote.

Liz Trotta contributed to this report from New York.

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