Bridges Weekly Trade News Digest • Volume 10 • Number 36 • 1st November 2006
US-Korea FTA Talks Begin To Make Progress
The fourth round of US-South Korea free trade agreement (FTA) negotiations ended in Jeju, South Korea, on 27 October. Although the two countries made progress towards reaching an agreement, the talks have proceeded more slowly than expected (see BRIDGES Weekly, 25 October 2006), necessitating a sixth round of negotiations in January 2006 in addition to the December round already planned.
During the negotiations, the two sides addressed less contentious issues such as customs administration, re-manufactured goods, administration of agriculture tariff rate quotas and anticorruption provisions. Progress in these areas was a welcome change from the third round of negotiations, which saw no progress at all.
The most contentious issues have been placed on the agenda for the fifth round, to take place on 4-8 December. The US will focus on trying to open up Korea’s beef and rice markets, while Korea will attempt to coax American concessions in the automobile and textile industries.
The US has recently adopted a softer stance in the hope of soliciting concessions from Korea. Among other concessions, the US has offered to immediately remove tariffs on 1,000 industrial goods and to set up a 10-year time frame for phasing out textile duties (valued at a total US$2.85 billion). In response, Korea has offered reduction of 138 agricultural tariffs (valued at US$88 million) and has indicated a willingness to make further concessions in December.
If the deal is concluded, Korea will be the biggest economy with which the US has made a trade pact since it concluded NAFTA in 1994. Korean exports to the US would rise by an estimated 15.1 percent, and Korean imports from the US would rise by an expected 39.4 percent. Although some kind of deal is certain to be signed, the scope of the eventual agreement remains to be determined. Due to the political sensitivity of the remaining issues, some analysts expect that the final agreement might be a diluted one.
"Next FTA Talks with U.S. Expected to be Turning Point," THE KOREA HERALD, 30 October 2006; "’Some Progress’ in FTA Talks, Big Issues Still Unresolved," THE HANKYOREH, 28 October 2006; "Free Trade Talks: Crucial Bargaining Has Yet to Begin," THE KOREA TIMES, 29 October 2006.
EU TAKES STEPS TO REDUCE GLOBAL MERCURY EXPOSURE
The European Commission has proposed a regulation to ban all EU mercury exports and to mandate the safe storage of surplus mercury. Pending joint approval by the European Parliament and the Council of Ministers, the legislation would take effect beginning in July 2011.
Both the ban and the storage measures are part of the EU’s stated commitment to reduce levels of mercury in the global environment, as exposure to high levels of mercury in any form — metallic, inorganic or organic — can permanently damage the brain, kidneys, and developing fetus. The EU mercury strategy launched by the Commission in 2005 outlines 20 measures to reduce mercury emissions, cut supply and demand, and protect against mercury exposure.
Although many environmental and health groups applauded the EU’s initiative in addressing the international mercury threat, some were still not satisfied as the proposed legislation will not cover mercury compounds or mercury-containing products. While some are concerned that the proposed implementation date of 2011 is too distant, others fear that there will not be enough time to allow for development of an environmentally sound method of permanently storing mercury.
The EU is also attempting to kick-start international action on mercury regulation. The Commission organised an international conference on mercury on October 26-27, where the EU and more than 30 non-EU countries began to discuss means of reducing human and environmental exposure. Next February, the possible development of a legally binding international agreement will be discussed at a meeting of the UN Environment Program (UNEP) Governing Council. Delegates hope to find more common ground than at the last Council meeting, where the US, Australia, and Japan preferred voluntary agreements to binding instruments (see BRIDGES Trade BioRes, 4 March 2005).
"Environment: Commission proposes ban on EU mercury exports," EU PRESS RELEASE, 26 October 2006; "European Commission Proposes Ban on EU Mercury Exports," ENS, 30 October 2006.
STERN WARNING ON CLIMATE COSTS
In a 700-page report on climate change delivered to the British government, Sir Nicholas Stern, former chief economist at the World Bank, warned that the world must take action now in order to avoid facing huge costs in the future. In fact, 20 percent of global GDP might be lost due to the effects of climate change by 2050 if nothing is done, he noted. On the other hand, investing one percent of global GDP into measures to mitigate climate change now would be enough to set the globe on a sustainable path. Nicholas Stern called for international action, with developed countries taking the lead, noting that "Whilst there is much more we need to understand - both in science and economics - we know enough now to be clear about the magnitude of the risks, the timescale for action and how to act effectively."
The report comes on the eve of the twelfth meeting of the Conference of the Parties (COP) of the UN Framework Convention on Climate Change (FCCC) and the second meeting of the parties to the Kyoto Protocol in Nairobi, Kenya from 6-17 November. The meeting is set to discuss the contention issue of what will follow once the Kyoto Protocol expires in 2012.
"Climate change fight ‘can’t wait’," BBC, 31 October 2006; "Publication of the Stern Review on the Economics of Climate change," UK TREASURY RELEASE, 30 October 2006.