Speeches and Transcripts

Offering a Broader Vision for Alliance

Ambassador's Interview with the Korea Herald [View PDF] Ambassador's Interview with the Korea Herald April 15, 2008 By Yoav Cerralbo This is the second in a series of articles on Korean President Lee Myung-bak’s summits with U.S. President George W. Bush and Japanese Prime Minister Yasuo Fukuda from April 15-21. - Ed. When President Lee Myung-bak visits Camp David later this week he will become the first Korean president to set foot on the mountain retreat usually reserved for the most important guests. The venue itself is special due to its relaxed atmosphere, away from the formal, structured dialogue of the White House.

At the isolated resort, leaders can sit down away from journalists and prepared scripts, get to know each other better, and brainstorm together to see where the Korea-U.S. relationship will go from here.

"It reflects the importance of the relationship," U.S. Ambassador Alexander Vershbow told The Korea Herald.  "President Bush has entertained many world leaders there but it’s primarily the closest alliance or key players that get invited."

Considering that Bush and Lee have not yet met, Vershbow added that it shows just how important this relationship really is.

Korea-U.S. FTA

On the itinerary for the meeting is a slew of topics from the FTA, the beef issue, North Korea, the automotive sector, the future of the military alliance and Korea’s role in the international arena.

"The FTA is going to be moving fairly soon, the issue that has delayed active consideration by Congress is the beef issue and we’re hopeful now that the elections are over that we can get down to serious negotiations on reopening the market in accordance with the scientific standards of the OIE," said Vershbow.

The debate on the KORUS FTA involves a different set of interests than the U.S. Colombian accord, something that might help its ratification in the U.S. Congress.

"It’s President Bush’s high priority to get his trade agenda fully completed this year and KORUS is the biggest of the FTAs that we’ve negotiated in the last few years because of its commercial and strategic significance," he said.

For the United States, the FTA provides more market access then previous bilateral agreements.

"What both sides gain by the agreement is a strengthening of standards of protection for investment, intellectual property rights and would make us both competitive and both more attractive to investments from the other side," Vershbow said.

He continued by saying that the United States negotiated a strong package in the automobiles sector under the Korean FTA.

Korea has long been a hard market to penetrate due to high tariffs, non-tariff barriers and complicated standards.

With the KORUS FTA the United States sees a positive solution for all these issues.
"There are some exceptional measures that were included like the ‘snapback clause’ where if there is any violation in Korea of its obligations, our tariffs snap back into place," he said.
But even with some of these measures, the deal has aroused certain controversies in the United States, especially from two of the big three automakers, Ford and Chrysler.

Their concern is that there is still asymmetry in Korean exports to the United States.  They point to the raw numbers: Around 700,000 Korean cars are exported to the United States whereas only 5,000 American-made cars are imported to Korea.

"Because of this vast difference there’s skepticism that it’s not worth giving up our modest tariff for the potentially small gains that may be achieved in the Korean market."

On the question of tariffs, Korea and the United States agreed on the immediate elimination of tariffs, 8 percent and 3 percent respectively.

In the case of pickup trucks, where there are higher tariffs, both sides agreed to faze out tariffs over a 10 year period.

Yet the automotive sector of the FTA might not have much of an impact as Korean automakers start to localize production in the United States.  Kia is building a new factory in Georgia and Hyundai already has a plant in Alabama.

"But trade is a very emotional issue right now so we have our work cut out for us in explaining the benefits of the FTA," the ambassador said.

There is also an agreement by the Korean side to make changes in the tax system, "which up to now was discriminatory against some of the larger models that we’ve been trying to sell in the Korean market."

Korean authorities also agreed to recognize the California environmental standards as an alternative to local standards.  This makes it easier for American automakers to ship models to Korea that meet those tougher American emissions standards, instead of having to build cars that meet those standards.

"It’s not economic to build a special standard when you’re only selling a few thousand or even a few hundred of a particular model," Vershbow pointed out.

He added that sales of American imports have risen in Korea, but not as much as European or Japanese sales.  He attributes that to the fading of the cultural bias against imported cars.

"That’s where the FTA will, hopefully, if it’s ratified, give American exporters a price advantage," he said.

Meanwhile General Motors is doing very well in the Korean market with its Daewoo investment.

Beef imports

While the KORUS FTA has some contentions in the United States, the beef issue has its challenges in Korea.

Last summer the Korean government suspended the sale of U.S. beef after bone chips were found in some shipments.

"That whole experience underscored that we needed a more viable solution to the beef issue that’s based on the international scientific standards, which the world body on the subject, the OIE, announced last May, that there’s no scientific justification to exclude U.S. beef whether it’s boneless or bone-in.

"President Roh promised to respect the scientific guidelines but to our regret, he never followed through, so the negotiations have just begun," Vershbow said.

One thing that was interesting during the period that U.S. beef was permitted to be sold in Korea was the substantial quantities that were sold.

"The consumers should have the freedom to choose between U.S. beef, Australian beef, domestic beef or anybody else’s beef, and we’re optimistic that we will reestablish a pretty respectable share of the market."

He added that the local market isn’t opening up for the first time to U.S. beef; on the contrary, it is trying to reenter into the market.

"Korean producers where able to survive the competition from American beef until the market got shut down in 2003.  They appeal to a different segment of the market given the higher price.  There will be consumers that will still want to buy those special cuts from Korean producers, but at a time when Koreans are increasingly concerned about inflation, bringing relatively cheap, safe and delicious American beef will be very timely," said the outgoing U.S. ambassador.

Furthermore, he added that when it comes to trade and food, all sides should respect the international standards; "that way it keeps politics and emotions separate from the science."

One of the challenges he pointed out was that people need to get more objective information.

"There’s been a lot of controversy about food safety in our own country (The United States) but the facts show that we have effectively dealt with the two isolated cases of mad cows disease and it shows that our inspection system and supply chain is reliable and able to prevent any contaminated product from getting into the food supply," Vershbow said.

North Korea

The summit meeting at Camp David will also give both presidents a chance to discuss the North Korean issue and the future of the six-party talks.

Even though there was friction between the United States and the Roh Moo-hyun administration, both parties found a way to work together in the six-party talks, transforming the defense alliance and arriving at a conclusion to the FTA negotiations.
"When President Lee took office, we were very pleased that he declared that the U.S.-Korean alliance is his highest priority," Vershbow said.

He added that both presidents have the same concerns about the welfare of the North Korean people and both would like to see a transformation of the situation on the Korean Peninsula toward genuine peace and a mutually beneficial economic relationship between the South and North.

Vershbow said: "It is unfortunate that the North Koreans have launched these extravagant propaganda attacks on the new government here and on President Lee personally.  I think that we certainly admire the restraint of the government here and not getting rattled by this sort of rhetoric which has frequently come at the start of a new administration in the South."

Moreover, Vershbow added that his government feels very comfortable with the new administration’s approach towards North Korea, in particular the emphasis on denuclearization as the most urgent task.

"We believe that it does make sense to insist on reciprocity," he said.  "And that the North Koreans don’t have any right to expect massive economic assistance if they want to hang on to their nuclear weapons - so we also appreciate the new administration’s readiness to speak out more on human rights in the North, which is a serious issue."

Parties are now taking a wait and see approach with North Korea - who is struggling to find its footing with a new South Korean government.

Alliance

At Camp David, both sides will talk over upgrading the relationship into a "genuine strategic alliance" which takes a proactive stance in dealing with global challenges by playing an active role in U.N. peacekeeping, dealing with the war on terror, on climate change and with the promotion of democracy worldwide.

"There’s great opportunity to expand the scope of the alliance on security issues and on political and economic issues as well," Vershbow said.

Lee has put a strong emphasis on regional diplomacy, especially with Japan and China and has reached out to Russia as a potentially bigger energy supplier for Korea.

"The two leaders will want to compare their visions for how they will hope to see relations among the Northeast Asian states evolve especially if we can get past the North Korean nuclear issue and begin to create some kind of regional network in Northeast Asia which is short on institutions compared to Europe or even Southeast Asia," Vershbow added.
Both governments will also be signing an MOU that will lay out a roadmap for Korea’s entry into the visa waiver program by 2009.

"So I think that’s going to symbolize the desire of both governments to take these personal connections to an even higher level."

On the Korean side, travelers will have to upgrade their travel documents to biometric passports.  They will also have to submit their basic data online a few days before traveling to the United States.  Once the names are checked, the traveler will be given the green light to fly into the United States.  This process, Vershbow said, would only need to be done once every few years.

On the American side, the United States has to create prescreening systems called the Electronic System for Travel Authorization.

Then there’s a second system to be put into effect to monitor the departures from the United States of people that have come in under the visa waiver program.

Even though the embassy will lose a massive cash cow, some $4.6 million a year, the ambassador is pleased that Korea is finally entering the program.

The future of the military alliance is another topic that both presidents will look at during their stay at Camp David.

"Both will continue this transformation process but also redefine a broader vision for the alliance and what it actually will be doing for our two countries in the years ahead."
While there have been some reservations by the new administration, Vershbow noted that both parties have the opportunity to evaluate the process year by year until the transfer takes place in 2012.

"It’s a healthy evolutionary step in the alliance and it’s appropriate for Korea as the world’s 13th largest economy, with a very impressive military, that it takes primary responsibility for its own defense but this doesn’t mean any reduction of the American commitment here.  We will still have forces here.  We’ll still have the full power of our military to back up the Koreans in a crisis or in a war," noted the ambassador.

He added that the alliance will remain a very important contributor to the stability of the wider region - even after a breakthrough with North Korea.

"If we succeed to reach an agreement for full denuclearization, we’re prepared to move at the same time for a peace agreement that will end the Korean War; we are prepared to normalize relations with the North, set up embassies, begin to have normal trade and exchanges, but I think that the alliance will still have a role to play providing stability during a time that China is growing in power and influence."

Even though the relationship between both countries has seen some difficulties in the past few years such as anti-American sentiments and a few awkward political moments, the relationship is a deep-seated one with roots well established on both sides of the Pacific.

"We have a leader now in Seoul who is committed to the U.S.-Korean alliance as his highest priority and wants to create an even more favorable environment for business and trade - this is a relationship worth fighting for."