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Amcham Korea March Ppp

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  • 1. The US-Korea Free Trade Agreement How to Promote Your Interests Amy Jackson C&M International [email_address] T: (202) 624-2501 F: (202) 628-5116 March 2006
  • 2. 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
  • 3.
    • 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 Watch The U.S.-Korea FTA: How to Promote Your Interests
  • 4. US Free Trade Agreements: 12 Completed Things 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)
  • 5. US Free Trade Agreements: 11 Proposed Things to Watch: FTAs are here to stay Middle East Egypt Kuwait Saudi Arabia Qatar Latin America Bolivia Mercosur Europe Switzerland Asia-Pacific ASEAN Japan Taiwan Philippines Indonesia New Zealand
  • 6.
    • 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 Ongoing Things to Watch: Competition for Scarce Resources
  • 7. 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
  • 8. Politics, Politics, Politics Things 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
  • 9. 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
  • 10. General US Goals and Desired Outcomes What 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”?
  • 11.
    • Korea is:
    • The world’s 10 th largest
    • economy
    • 7 th largest U.S. Trading
    • Partner
    • 6 th largest market for U.S. ag
    • exports
    • 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 Benefits What is needed for success of the US-Korea FTA? $43.8 billion in 2005 $27.6 billion in 2005 Iron and Steel Articles Aircraft, Spacecraft and Parts thereof Mineral fuel, oil, etc. Optic, photo and medical instruments Nuclear reactors, boilers, machinery Organic chemicals Autos Nuclear reactors, boilers, machinery Electric Machinery, Sound/TV equipment, etc Electric Machinery, Sound/TV equipment, etc. Top 5 U.S. Imports from Korea Top U.S. Exports to Korea
  • 12. 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?
  • 13. “ 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 level What is needed for success of the US-Korea FTA?
  • 14. 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:
  • 15. Macro-level Factors What is needed for success of the US-Korea FTA? Wild Card: No Foreign Policy Blow-Ups Six Party Talks US military “incidents” Other
  • 16. Wild Card: No FTA Issues Become “Too Hot to Handle” Korean Side Macro-level Factors What 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
  • 17.
    • 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?
  • 18. 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 Bush November 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
  • 19.
    • 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 Factors What is needed for success of the US-Korea FTA? Don’t underestimate their role. Let them know you care throughout the process.
  • 20. What You Can Do: Role of individual companies The 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
  • 21. Don’t Underestimate Your Ability to Influence What You Can Do Executive Branch (President & Agencies ) Congress Private Sector Korean Government
  • 22. 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
  • 23. Take advantage of opportunities What 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 PHARMA GOVERNMENT TRANSPARENCY POSTAL INSURANCE OTHERS?
  • 24. 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?
  • 25. 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 your bottom line
  • 26. 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 Effects
    • of FTAs
      • Economic
      • Employment
      • Labor and environment
    Be vocal What You Can Do
  • 27. 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
  • 28. 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
  • 29. “ 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
  • 30. 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 3 rd 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.
  • 31. Federal Register Notice on KUFTA http://frwebgate/access.gpo.gov/cgi-bin/multidb.cgi USTR http://www.ustr.gov US-Korea FTA Business Coalition http://www.uskoreafta.org Other Resources What You Can Do Congress—Find your Representative http://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.govfta