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The US-Korea Free Trade Agreement How to Promote Your Interests Amy Jackson C&M International [email protected] T: (202) 624-2501 F: (202) 628-5116 March 2006

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Page 1: Amcham Korea March Ppp

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