Thursday, February 15, 2007
OBSERVER
More than just a trade deal
TROY STANGARONE
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As the US Congress continues to debate Iraq and the future ofAmerican foreign policy, negotiations are taking place near the Capitol that may provide a glimpse of that policy's future.
The US and South Korea this week are undertaking the seventh, and likely final, round of free-trade agreement negotiations.
These talks are significant for the Washington-Seoul relationship, and the US role in Asia.
Northeast Asia is the world's most dynamic region. As China "rises" and a global economy emerges, the locus of economic and political power is being dispersed at an ever increasing pace.
The US response to these changes will shape the 21st century and America's place in it.
Over the past few years, the US-South Korea alliance has begun to evolve to better reflect both current realities in foreign affairs and South Korea's status as a developed nation.
The US is in the process of returning wartime military control of South Korean forces to Seoul and moving American forces out of the South Korean capital and into the countryside.
The US has nearly 30,000 troops stationed in South Korea, and military co-operation extends beyond the Korean Peninsula. South Korea has the largest contingent of troops in Iraq after Britain.
The free-trade talks are part of this larger process. South Korea, located between two economic giants, is the world's 11th-largest economy. It is America's seventh-largest trading partner: two-way trade tops US$72 billion.
For South Korea, a free-trade agreement with the US offers greater access to the world's largest consumer market, and guarantees continued economic relations with its most important military ally.
For the US, a trade deal offers increased market access in what would be the largest market opening for American goods since the North American Free-Trade Agreement. It strengthens the ability to set new standards for similar deals in Asia and between developed economies.
Moreover, a Washington-Seoul trade pact would give the US an economic beachhead in a region where free-trade agreements are rapidly proliferating and setting higher standards for market access - which will benefit US businesses.
For both sides, this agreement will help to move the alliance beyond its historical roots in the conflict with North Korea: it will begin to develop a more permanent and sustainable dimension to the alliance.
As economic power becomes more significant and China plays a larger role in the region, it will become important to ensure that the US does not become too Japan-focused.
As the two sides work to reach an agreement this week, significant issues must still be addressed. Among Washington's leading concerns are the removal of non-tariff barriers that have hindered the access of US goods such as cars; improved access for innovative American drugs; and more access for US agricultural products in the South Korean market.
South Korea is likely to present a new proposal to address its needs in the area of trade remedies, and look for increased access for its textile producers in the US market. These issues do not include the most politically sensitive concerns: the return of American beef to the South Korean market - once the third-largest export market for United States beef; and Seoul's request that products from a South Korean-run industrial complex in North Korea be considered South Korean, rather than North Korean, goods.
In one sense, the US-Seoul free-trade agreement is a commercial deal, negotiated on commercial terms.
In another, it is a pact that will be woven into the fabric of a changing bilateral alliance.
Both sides must now decide what type of alliance they want that to be: one that is ad hoc and primarily rooted in short-term benefits, or one grounded in shared, long-term interests.
Troy Stangarone is the director of Congressional Affairs and Trade for the Korea Economic Institute of America. These views are his own. Distributed by Pacific Forum CSIS
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