- The Washington Times - Thursday, December 14, 2006

SEOUL — It is a weekday evening in the downtown Wuahanjib rest- aurant and the fumes of char-grilled beef mix with the heady smells of garlic and kimchi. “All Korean beef is eaten within one month,” manager Han Ju-han said as the finely marbled local beef sizzles on the barbecues. “Imported beef comes a long way, so quality is lower.”

Korean beef is the world’s most expensive. In a tightly protected agricultural market, diners at Wuahanjib pay 32,000 won, or $34, for a serving of beef ribs and 70,000 won, or $75, for the choicest cuts.

Meat was on the minds of negotiators of the Korea-U.S. Free Trade Agreement last week in the Montana beef belt. The fifth round of discussions was overshadowed by news that South Korea had rejected the latest shipment of U.S. beef.

Once the world’s third-largest market for U.S. beef, South Korea halted American shipments in 2003 because of fears of mad cow disease. Imports resumed in October, but the first three shipments, totaling 9 tons, were halted when bone fragments, prohibited by Koreans, were discovered in the meat.

“We can do more to clarify inspection and rejection protocols,” Commerce Secretary Carlos Gutierrez told a group of businessmen in Seoul on Tuesday. “The beef we export to Korea is the same beef as we eat in the U.S.”

Tough talks

Progress has been slow since the trade talks commenced in February. In addition to beef issues, Mr. Gutierrez noted no movement in the two areas of key U.S. concern: improved market access for automobiles and pharmaceuticals.

South Korea, meanwhile, has demanded discussion of anti-dumping procedures and other trade remedies. Mr. Gutierrez insisted that is not in the bailiwick of trade negotiators, but a matter for Congress.

Seoul also wants the agreement to include goods produced at the Kaesong industrial complex in North Korea. Washington disagrees. The talks have not even begun to discuss trade in rice, an emotive issue for Korea, which wants it taken off the table.

Washington insists that the Korean-U.S. agreement be a “gold standard,” with all sectors included. The stakes are high. The United States is Korea’s No. 2 trading partner; South Korea is No. 7 for the United States. Last year, bilateral trade nearly reached $72 billion. Studies estimate that a free-trade agreement could raise U.S. exports to South Korea, the world’s 11-largest economy, by half. Mr. Gutierrez called the Korea agreement “the most important … in 15 years.”

Analysts say an agreement would grant South Korea a big advantage over rivals China, Japan and Taiwan, increase its companies’ competitiveness and raise national gross domestic product by 2 percent.

Despite these benefits, South Koreans are debating the desirability of the agreement in the newspapers and on the streets, from farms to the legislature.

Competitive and confident

President Roh Moo-hyun has championed the free-trade agreement.

“Korea is a country that has grown through opening and competition, and is confident of its competitive edge,” he said in August. “The United States is the world’s largest market. Korea has to win it over there.”

He is at odds with many in the ruling Uri Party. Party leader Kim Keun-tae said this month that Korea should not rush into an agreement.

A surge of demonstrations involving 30,000 to 70,000 people has shaken the country in recent weeks. South Korea’s vocal farmers fear that a flood of U.S. agricultural products would submerge them.

“The U.S. wants to monopolize production and distribution of agricultural produce all over the world through economies of scale,” said Lee Young-soo, policy chief of the Korea Peasants’ League, which claims the support of more than 100,000 farmers. “Rice is related to sovereignty. I believe that food and agriculture must not be subject to negotiation,” Mr. Lee insisted.

Although farmers account for less than 4 percent of GDP and 7 percent of the work force, most Koreans are only one or two generations removed from the countryside, which gives farmers enormous emotional clout.

Some industrial and service-sector unions also reject the free-trade accord on ideological and anti-competition grounds. They are supported by a mixed bag of anti-globalization activists and anti-American groups. Even filmmakers, angry at increased market access for foreign movies, oppose the accord.

“The FTA serves the profits of big corporations,” Kim Tae-il, general secretary of the 570,000-member Korea Confederation of Trade Unions, said at a recent rally in Seoul. “Farmers, organizations for the urban poor, and social movements are with us: Around 60 percent of people are against the FTA, according to opinion polls.”

“If there is an FTA, big educational corporations in the U.S. will enter Korea and undermine the public’s right to education,” said Lee Byoung-ju, a Korea Teachers Union official at the demonstration. “Education is not for sale.”

Proponents speak softly

In this charged environment, proponents of the trade accord speak with care. Officials of the Presidential Commission on Facilitating the FTA, an organization trying to sell the accord to the Korean public, and KOTRA, the Korean trade promotion organization, declined to comment, calling the issue “too sensitive.”

Businesses, which would benefit considerably, have kept a low profile.

“It’s a little surprising [that] the industrial sector does not have a louder voice,” said Hyun Oh-seok, president of research at the Korea International Trade Association. “They may think that if some companies benefit, the public, press and politicians might say: ‘You’d better compensate affected sectors,’ and they worry that [groups opposed to free trade] could initiate ‘no purchase’ campaigns.”

Though South Korean food prices are among the world’s highest, the trade association said, consumer groups have not weighed in on the debate.

“For five decades, Koreans were told that exports were patriotic, so now some consumer groups think foreign products are not safe,” Mr. Hyun said. “Consumer groups are more focused on safety than budget.”

This doesn’t mean that Koreans refuse cheap U.S. beef or rice. Local press reports say the most popular black-market item smuggled off U.S. military bases is American rice, and steak restaurants on bases reportedly do a roaring trade from local clientele.

Some signs are positive.

Tami Overby, president of the American Chamber of Commerce in Korea said, “The number of rabid media articles [opposing U.S. exports] is declining. They see that foreign investment and Korea’s competitiveness relative to its neighbors is declining, so they see an FTA as the best thing they can do.”

The next talks are scheduled for January, and President Bush’s trade promotion authority expires in June.

“Following recent elections in the United States, some argue that the winds may have shifted in favor of protectionism,” said Mr. Gutierrez. “The United States and Korea must make tough political decisions to open our economies to competition.”

As liberal administrations in Seoul face off against neoconservatives in Washington, analysts fear, a failed trade agreement could further poison the diplomatic and military alliance.

However, some analysts expect good sense to prevail on both sides.

“I remain cautiously optimistic,” said Miss Overby. “Once they get beyond the emotion of the issues, there is so much for both sides to gain.”

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