Bridges Weekly Trade News Digest • Volume 10 • Number 29 • 13th September 2006

US And Korea Wrap Up Third Round Of FTA Talks

Do More

Download this issue

See also

The US and South Korea held their third round of free trade agreement (FTA) negotiations, from 6-9 September in Seattle. They agreed to concessions on agriculture, textiles and manufactured goods that officials said went further than either had anticipated. However, several obstacles remain if the two countries are to meet their target of concluding a deal by the end of the year.

With regard to agriculture, thought to be the most likely deal-breaker for both countries according to an August survey of 25 US government, business and policy experts by the Korean Economic Institute, the US asked for Korea to open its markets for beans and corn first, since this would have the mildest effect on the latter’s agriculture industry. Korea is expected to propose specific concessions on farm produce shortly.

Wendy Cutler, the US’ chief negotiator, said the talks moved "the ball forward a bit" in the areas of environment, sanitary and phytosanitary measures, services and investment and labour. However, no breakthroughs were achieved in Seattle in the working group on automotive trade, in which Washington has complained that Korea has not sufficiently opened up its market to US cars. Nor were there any advances on pharmaceutical trade, where US manufacturers are concerned about the effects of Korean healthcare regulations on their ability to sell new medicines there (see BRIDGES Weekly, 14 June 2006). Negotiators were also unable to narrow differences on easing US anti-dumping measures.

The US continued to refuse any discussion of letting the agreement cover goods manufactured in the South Korean-owned Kaesong Industrial Complex in North Korea. Moreover, following Korea’s earlier agreement to relax its quotas on the screening of foreign films, the US demanded changes to regulations on Korea’s business conglomerates, including increased foreign ownership of broadcasting corporations.

The US and Korea have agreed to hold separate talks on cars, textiles, pharmaceuticals and regulations on place of origin before the fourth round takes place from 24-27 October on Jeju Island, Korea.

ICTSD reporting; "Tough US-Korea Trade Talks End in Disappointment," REUTERS, 9 September 2006; "Korea, U.S. Agree to Wrap Up FTA Talks by Year-End," CHOSUN, 11 September 2006; "FTA Hits Snags," THE KOREA TIMES, 11 September 2006.

EU, JAPAN RESTRICT US RICE IMPORTS AFTER GM CONTAMINATION

Japan and the European Union imposed restrictions on long-grain rice imports from the US after Washington announced on 18 August that its commercial rice supplies had been contaminated by trace amounts of a genetically modified (GM) variety of rice not approved for human consumption.

Bayer CropScience, the producer of the herbicide tolerant rice variety LLRICE601 informed the US Department of Agriculture (USDA) and Food and Drug Administration (FDA) that traces of the rice had been detected among its traditional rice crops on 31 July. Bayer reportedly discovered the contamination in January 2006, six months before informing the government. The USDA and FDA have stated that there are no human health, food safety, or environmental concerns associated with the rice. They have also acknowledged that they did not know which state the rice came from or how widespread the contamination might be.

Japan, which has a zero-tolerance policy on GM rice, imposed a ban on the rice almost immediately. However, Japanese officials said that the country’s imports were concentrated in short- and medium-grain rice, which were not included in the ban. On 23 August, the European Commission decided to require that imports of long-grain rice from the US be certified as LLRICE601-free, following testing by an accredited laboratory using validated testing.

Bayer is now facing three lawsuits filed by rice farmers in the US, two of which are seeking class action status. The USD 1.9 billion per year industry, on the verge of harvest, is facing falling prices and uncertainty about the marketability of future crops.

Greenpeace International has called for a ban on all GM rice. "Rice is the world’s most important staple food and contamination of rice supplies by Bayer, a company pushing its GE rice around the world, must be stopped," said Jeremy Tager, Greenpeace International campaigner. On 5 September, Greenpeace and Friends of the Earth announced that GM rice experimentally grown in China had been discovered in the UK, France and Germany.

"US Under Pressure over Genetically Modified Rice," FINANCIAL TIMES, 22 August 2006; "US Rice Supply Contaminated," WASHINGTON POST, 19 August 2006; "Japan Halts Import of US Long-Grain Rice," ASSOCIATED PRESS, 21 August 2006; "Bayer Faces More Lawsuits over GMO Rice," REUTERS, 29 August 2006; "GM rice contamination reaches the UK," GREENPEACE, 5 September 2006.

BUSH TO SIGN COLOMBIA FTA AFTER BOGOTA DROPS BAN ON US BEEF IMPORTS

Days after Colombia agreed to drop all mad cow disease-related restrictions on US beef imports, US President George W. Bush notified Congress on 24 August that he would formally sign a free trade agreement (FTA) with the Andean country. The FTA negotiations were largely wrapped up earlier in the year, save for some sticking points primarily related to agriculture trade.

Some 20-odd countries around the world have maintained bans on importing beef from the US since December 2003, when a cow there was found to have bovine spongiform encephalopathy (BSE). Many other governments impose various restrictions on US beef, only opening their markets to specific types of meat from cows under 30 months of age.

In August, Colombia and the US signed side letters to the FTA addressing the issue. A US agriculture spokesperson said that Colombia agreed to accept all beef products from the US, regardless of the age of the animal, so long as they receive formal approval from US food and safety authorities.

Removing barriers to US beef has emerged as a major priority in the US’ trade strategy. Nevertheless, US beef exports remain at little over half their 2003 levels, according to the National Cattlemen’s Beef Association.

Under heavy pressure to end its import ban during FTA negotiations with Washington, Korea agreed on 8 September to resume imports of boneless beef from cattle under 30 months old. Japan, which along with Korea used to be a major market for US beef, has only opened its markets to some kinds of beef from cattle younger than 21 months old. The US has also been urging China to relax its beef import ban, although trade is yet to resume.

The US’ unilateral trade preferences for Andean countries will expire at the end of the year. Exporters from Colombia and Peru risk seeing their access to the US market reduced unless the FTAs enter into force at that time.

ICTSD reporting; "Bush tells Congress will sign Colombia trade pact," REUTERS, 24 August 2006; "S Korea resumes beef imports," CAYMANIAN COMPASS, 11 September 2006.