WASHINGTON — The U.S. kicked off negotiations for a free trade agreement with South Korea on Monday against a backdrop of protests from Korean farmers and labor activists.
Assistant U.S. Trade Representative Wendy Cutler said the countries had exchanged text and negotiating proposals in advance of the first round of talks here, in which 15 of 17 negotiating groups, including one for textiles, and two working groups are sitting down together for the first time.
Cutler said it was “too early to say” what issues may arise in the negotiations, and she did not reply to a question about whether the U.S. has put forward a proposal on rules of origin for textiles and apparel — always vital and sometimes contentious in trade treaties.
The domestic textile industry is pressing for a strict yarn-forward rule of origin, requiring goods receiving duty-free treatment under the agreement to be made of yarn and fabric produced in South Korea or the U.S. The industry is opposed to any exceptions to the rule that would allow producers in South Korea to use fabric and yarns from other parts of the world, such as China.
Importers and retailers, however, are seeking more flexibility in the agreement, such as linking inputs from South Korea to other countries that have free trade agreements with the U.S., including the Central American countries and Australia and Singapore.
South Korea is the sixth largest apparel and textile exporter to the U.S., with shipments of 2 billion square meters equivalent, valued at $1.8 billion, for the year ended March 31. Textiles accounted for the bulk of those exports on a volume basis, totaling 1.8 billion of the 2 billion SMEs the country shipped to the U.S. during that time.
“As we move into the negotiations, we have a better sense of where things stand, and I remain optimistic of our ability to conclude a high-quality … agreement,” Cutler said, although she acknowledged some opposition to the trade deal in South Korea and the U.S.
“I am focusing on the substance of the talks this week,” Cutler said. “Clearly, there are people in the U.S. and Korea who are concerned about this agreement, concerned that this agreement may not benefit their sectors,” but she added that there is also broad support for the deal.
She identified two “challenging” issues the two countries will have to confront during the talks: agriculture and auto exports.
Cutler, who noted that the second round of negotiations is to begin the week of July 10 in Seoul, said the U.S. is determined to wrap up the negotiations by the end of the year and submit the agreement to Congress before President Bush’s trade promotion authority, which allows trade deals to go before Congress without an amendment, expires in July 2007.