The US and South Korea should redouble efforts to reach a bilateral trade agreement to cement their alliance following North Korea’s nuclear test, Lee Tae-sik, South Korea’s ambassador to the US, and Bill Rhodes, senior vice-chairman of Citigroup, told the Financial Times.
In a joint interview Mr Lee and Mr Rhodes, who is also chairman of the US-Korea business council, appealed to policymakers to see the nuclear crisis as an opportunity to galvanise the trade talks, which resume on Monday in Jeju, South Korea.
The proposed agreement should now be seen in geopolitical terms and not simply as a commercial pact, they said. Mr Lee said: “The argument here is how to strengthen, how to broaden the relationship between our two countries. Our security relationship would be much strengthened through an economic partnership.”
Mr Lee hinted that South Korea could show new flexibility over Kaesong, its industrial park in North Korea. Although South Korea suspended humanitarian aid to the North after missile tests in July, critics say it has continued to pump cash into the regime through Kaesong.
“Because of North Korea’s missile tests and nuclear test the situation has become much more aggravated,” he said. “When we started these negotiations we wanted to include it [Kaesong] in the FTA but as time goes by we have noticed that the atmosphere has been shifting rather negatively against this idea.
“We know that,” he added. “That is why we are squeezing our wisdom to find some way out.”
Mr Lee said that if the tests had not taken place, the world would see Kaesong in a much more favourable light.
Mr Rhodes said this week would be crucial, as time was running out. Both governments want an agreement by the end of the year so the US can ratify it before the expiry of president George W. Bush’s fast-track trade promotion authority next year.
Mr Rhodes said: “It is now geopolitical in the sense of merging security issues and economics together. There is a real opportunity here that the military alliance between the US and South Korea becomes a fully fledged military, trade and economic alliance.”
Karan Bhatia, the deputy US trade representative, arrives in Seoul on Monday for the fourth round of talks. A US official said he recognised that the US-South Korean partnership “has become more important in the context of recent events”. But he was pessimistic about the prospect of a breakthrough. “We have got a lot of work to do,” he said.
Negotiators were “down in the weeds” and focused on commercial rather than grand strategic issues, he added. The US wants greater market access in rice and beef, removal of what it claims are non-tariff barriers in the car sector and a more import-friendly regulatory regime for pharmaceutical products.
The official said the US was still not asking South Korea to scrap the Kaesong project to secure a free-trade deal but would continue to insist Kaesong was not part of any FTA.
