In November 2004, when trade ministries from Korea and the U.S. held a meeting in Chile, both parties agreed to pursue the possibility of US-Korea FTA negotiations.

Between February and April of 2004, both governments met three times to examine the feasibility of the US-Korea FTA, while the trade ministers of both countries held 6 meetings to further examine the initiation of bilateral FTA negotiations.

At a meeting held on the sidelines of another APEC (Asia-Pacific Economic Cooperation) summit in Chile in November of 2005, President Roh and President Bush confirmed their willingness to push forward with US-Korea FTA talk. Finally, on February 3, 2006, both countries formally announced the launching of official US-Korea FTA negotiation.

Since the announcement, the US and Korea have had several joint preliminary meetings aimed at tuning up the formal FTA talk. On March 6, and April 17-18, both governments met off-the-record in conference to prepare for the actual negotiations.

Through these meetings, they agreed to include 17 disputed sectors in the initial round and to adopt "KORUS FTA" as the official name of the agreement. On May 19, the two countries exchanged drafts of the initial proposals to be discussed during the first round of the FTA talks.

The US and Korea have agreed that they will release the final joint agreement to the public immediately after completion, but they will not reveal any other documents generated during the negotiation process for the next three years.

¡Þ Schedule

The goal in the current FTA negotiations between Korea and the U.S., set when the matter was first brought up in February of this year, is to conclude the negotiations by the end of the year.

There are five rounds of US-Korea FTA talks scheduled for 2006. The first talk is happening in Washington DC from June 5 to 9. The objective of the first round of talks is to simply examine the initial drafts and understand each country's position and intentions concerning sensitive issues, rather than press each other to prematurely arrive at a conclusion.

Both parties are likely to discuss simple issues first and set aside areas of special interest for further discussion in later talks.

The substantial discussion on conflicting issues regarding goods, capital and, services will be primarily dealt with during the 2nd round of FTA talks, which will be held July 10-14 in Seoul. Three more rounds are currently scheduled for September (Washington), October (Seoul), and December (Washington).

< schedule chart >

1st Round	June 5-9 2006	Washington DC
2nd Round	July 10-14, 2006	Seoul, Korea
3rd Round	September 2006	Washington DC
4th Round	October 2006	Seoul, Korea
5th Round	December 2006	Washington DC

¡Þ Negotiation Teams

The Korean negotiation team is composed of 80 delegates from the trading negotiation department within the Ministry of Foreign Affair and Trade and about 60 additional officials from various government offices related to commerce and trade.

The US has a negotiation team of nearly 170 representatives, which outnumbers the Korean team. The chief Korean negotiator Kim Jong-hoon commented that, "Since the negotiations are taking place in Washington DC, it is expected that the US government will benefit from the home ground advantage."

Nothing describes the Korean negotiation team better than 'the Trading Dream Team,' considering each member of the team is a well-known trade expert or experienced official in his or her field.

< Negotiation Teams >

Sector	Korea	United States
Chief Negotiator	Kim Jong-hoon, Chief Negotiator	Wendy Cutler, Assistant US Trade Representative
MA/NT	Lee Hye-min, Chief Director for FTA	Tiffany Smith, Director of Tariff Affairs
Agriculture	Bae Jong-ha, Senior Director for International Agriculture	Andrew Stephens, Director of Bilateral Agricultural Affairs
Textile	Kim Soon-chul, Director for Textile and Fashion/td>	Caroyl Miller, Deputy Textile Negotiator
Country of Origin / Customs Clearance Process	Kim Jong-bum, Director for FTA Product Negotiation Jun Joon-hong, Director for Custom Affairs	JJay Eizenstat, Director for Custom Affairs
Trade Protection	Sim Dong-sub, Director for Investigation Lee Won-tae, Director for Custom Policy Kim Kyung-han, Director for Trade Strategy
SPS (Sanitary & Phytosanitary)	Jung Hyun-chool, Director for FTA2	Cathy Enright, Director for Sanitary & Phytosanitary Measures
TBT (Technical Barriers to Trade)	Lee Choong-ho, Director for Global Standards	Suzanne Troje, Director for Technical Barriers to Trade
Investment	Choi Kyung-lim, Senior Negotiator for FTA Kim Pil-gu, Director for Investment	Amber Cottle, DAUSTR for Investment
Service	Kim Young-mo, Director for Arbitration of Trade Yoo Myung-hee, Director for FTA Service Negotiation	Chris Melly, Director for Service Trade Negotiation
Financial Service	Sin Jae-yoon, International Finance Investigator	Kimberly Claman, Senior Director Investment Affairs Treasury: TBD
Telecommunications / Electronic Commerce	Nam Young-sook, Secondary Negotiator for FTA Jung Dong-hee, Director for Electronic Commerce	Jonathan Mchale, Director for Telecommunications Trade Policy & Electronic Commerce
Competition	Kim Jong-bum, Director for FTA Product Negotiation Jang Deuk-soo, Director for International Corporation	Stu Chemtob, Special Counsel for International Trade Antitrust Division, DOJ Scott Ki, Senior Director for Korea
Government Procurement	Ahn Myung-soo, Law Officer for Trade Jang Hoon-ki, Director for Accounting System	Jean Grier, Senior Procurement Negotiator
Intellectual Property Rights	Lee Gun-tae, Senior Director for Local Trade Park Min-kwan, Director for Intellectual Property	Jennifer Choe-Groves, Director for Intellectual Property
Labor	Park Suk-bum, Senior Director for International Economy Lee Myung-ro, Director for International Negotiation	Lewis Karesh, AUSTR for Labor
Environment	Park Suk-bum, Senior Director for International Economy	Russell Smith, Director for International Environmental Policy & Multilateral Environmental Agreements
Arbitrage / Transparency / Provisions	Kim Won-kyung, Director for FTA Local Negotiation	Jim Kelleher, Associate General Counsel
Automobile	Kim Hau- yong, Investigator for Local Trade Kim Young-min, Director for Transportation Technology	Scott Ki, Senior Director for Korea
Pharmaceuticals / Medical Provisions	Jun Man-bok, Senior Director for FTA T/F	Arrow Augerot, DAUSTR for Korea Tom Bollyky, Director Asia-Pacific & Pharmaceutical Policy

¡Þ Key Differences

As the FTA talks began today in Washington, Korea and the United States will face some challenges in reaching an agreement because of differences in priorities.

This first round of talks will cover 17 sectors of trade, including agriculture, financial services, medicine, education, legal and accounting services, broadcasting and advertising, government procurement, and utilities such as electricity, gas, and tapped water.

Although both countries wish to complete these negotiations successfully, Korea and the US have very different opinions about several key issues, as each has its own demands and wishes regarding various sectors.

Regarding agricultural trade, the US wants to open the Korean market completely for all agriculture products. However, Korea wishes to protect its domestic agricultural market by imposing a special tariff on key products such as rice, chicken, tobacco, and apples.

Korea especially desires this safeguard as they have already raised its rice import quota from 4 to 7.96 percent of total domestic consumption under a deal made in the 2004 World Trade Organization.

Another point of conflict has to do with automobile trade. The US wants Korea to remove key tariffs on imported US vehicles, but Korea plans to maintain such tariffs, as automobile tax is a key source of revenue for their local governments.

The U.S. also wants Korea to remove all tariffs on pharmaceutical and medical equipment, but Korea says they only want to open up these markets in varying degrees by selected items.

On the other hand, Korea wants the U.S. to recognize those products manufactured in Gaesong, North Korea as Korean goods, but the US refuses to accept Gaeseong products as made in Korea.

Korea also requests the US to allow a new quota of visas for Korean workers, but the US says no.

< 17 Sectors to be discussed during Korea-U.S. FTA Talks >

Sectors	Content
Merchandise Trade	Reduce/remove merchandise tariffs including automobiles, pharmaceuticals, and medical equipment, etc. (excluding farm products)
Trade Protection Policy	Anti-dumping, compensation for tariffs and subsidies, other safeguards, etc.
Agricultural Industry	Reduce/remove of tariffs and implement safeguards on farm products
Textile Industry	Textile / apparel fields, dispute about textile origin, etc.
Source of Manufactured goods/Customs Clearance Process	Establish criteria for the origin of manufactured goods and simplify customs clearance process
Sanitary & Phytosanitary (SPS)	Sanitation and medical inspection process
Technical Barriers to Trade (TBT)	Technology barriers and validation standards
Investment	Liberalize and protect investment
Services	Liberalize services (excluding finance) and flow of human resources
Financial Service	Financial service issues
Telecommunication / Electronic Commercial Transaction	Telecommunication / electronic commercial transaction fields
Competition	Measures for competition and ways to cooperate among competitive countries
Government Procurement	Plans to liberalize government procurement
Intellectual Property Rights	Intellectual property rights issues, including patent rights, copyrights, trademarks, etc.
Labor	Labor issues
Environment	Environmental issues
Arbitrage/Transparency / Provisions	Arbitrage process, such as interpreting the agreement Increase the transparency of the agreement process

Furthermore, the US wants the limit on foreign shareholding in the telecommunications industry to be completely removed, but Korea wishes to maintain it. The US demands this because encouraging the selection and dictating the incorporation of Korea's standard technology by Korean industries limit foreign access to Korea's telecommunications sector and other key industries.

Lastly, Korea agrees to partially liberalize the cross-border capital trade, but the US demands a complete liberalization. They want Korea to either fully liberalize its courier services or to improve its business environment in the two sectors so that US firms can provide new financial derivative services in Korea.

Korea's FTA Ambassador Kim Jong-hoon and Assistant US Trade Representative Wendy Cutler will meet for five days, along with about 300 other delegates from Korea and the United States, in efforts of resolving these conflicts of interest between the two nations. Though the FTA drafts are aggressive on both sides, Kim said on Friday that "Our aim is to advance the negotiations so that they can be acceptable for both sides," and Cutler said during a conference call on Monday, "I remain optimistic about our ability to conclude a high-quality, comprehensive agreement¡¦the political will is clearly there on both sides."

Despite such major differences between the desires of the U.S. and those of Korea regarding the foreign trade agreement, hopefully the two countries can work out these differences in order that they can strengthen and not weaken the Korea-US relationship.

After the five-day meeting this week, Korea and the U.S. will meet in Seoul on July 10-14 for the second round of talks, and future meetings have been scheduled for September, October, and December, so as to meet the March 2007 negotiation deadline before President Bush's power to sign trade deals expires on July 1, 2007.

Korea	Issue of Conflict	United States
No additional rice market opening/Seeking to protect key agricultural items	Agricultural Trade	Complete opening without exceptions by Korea
Apply to Korean agricultural industry	Activating special safeguards	Adopt for US textiles industry
Automobile taxation system is not negotiable	Automobile trade	Removal of key tariff items on imported US vehicles
Open up markets in varying degrees by items	Pharmaceutical & medical equipment	Complete removal of tariffs
Should be treated as made-in-Korea goods by the US	Made-in-Gaeseong products	Disregard (not negotiable)
Limit should be maintained	Foreign shareholding limit in telecom industry	Complete removal
Permission	US allotment of new visa quota for Korean workers	Disregard (not negotiable)
Limited liberalization	Cross-border capital trade	Complete liberalization