President Obama Calls For Renegotiation Of US/Korea FTA

President Barack Obama has directed U.S. Trade Representative Ron Kirk to enter into a new round of
negotiations with South Korea on a revised free trade agreement (FTA) that hopefully can lead to
congressional ratification. The Bush administration concluded a FTA with South Korea in June 2007,
but Congress has not been willing to ratify it in view of problems with market access for U.S. beef
and automobiles and other considerations. U.S. textile manufacturers have been opposed to the
agreement in view of the fact that South Korea has a large, efficient textile industry that poses a
threat to them, and they see little in the way of increased access to the Korean market. While the
current agreement has a yarn-forward rule of origin, U.S. manufacturers are concerned that it does
not provide for effective Customs enforcement in view of what they say is a  “proven history”
of both dumping and transshipments of goods from China, where Korean firms have extensive

The existing agreement has been attacked by the United Auto Workers and U.S. auto
manufacturers, and Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, will demand
more market access for U.S. beef exports.

Kirk said he welcomes Obama’s direction to complete a FTA by the time the president visits
South Korea in November, which, incidentally, will be after the elections.

Kirk said he has conducted extensive discussions with a wide range of stakeholders and
congressional leaders to gain a detailed understanding of their concerns. He promised that these
discussions will continue throughout the upcoming consultations and negotiations with South Korea.

July 6, 2010