US sees more FTAs with Asia Free trade deal with South Korea provides the US an important foothold in Asia
Saturday, April 7, 2007
A NEW US trade deal with South Korea, Asia's third largest economy, could prompt other countries in Asia to reform their economies and open their markets, a US negotiator said.
The bilateral agreement, which officials announced over the weekend after a last-minute negotiating marathon, would be the biggest for the United States in 15 years. It must now be passed by Congress.
"It provides us an important foothold in Asia, the fastest growing region in the world," lead negotiator Wendy Cutler told congressional aides and business groups in Washington. Studies suggest it could add US$17 billion to US$44 billion to US-South Korean trade, already at US$78 billion a year.
Cutler also said the deal, only the second US free trade agreement with an Asian country after Singapore, could be a model for future deals. US negotiators are also holding talks on a trade deal with Malaysia.
Cutler and other officials see a domino effect. "There is a possibility that the Korean agreement will be a stepping stone to a wave of liberalisation in East Asia," Deputy US Trade Representative Karan Bhatia said.
He suggested that, in the intensely competitive Asian environment with highly mobile capital and trade, even marginal tariff advantages could alter production decisions.
While there has been talk of a US-Japan trade deal, US officials said recently the time is not right.
At least one analyst argued that the exclusion of rice from the agreement, a triumph for Korea, would actually lure other countries into negotiations with the United States because they would also like to continue to exclude highly sensitive goods. The deal's exclusion of rice is proof US negotiators did not get everything they wanted after 10 months of talks.
Culter said her team realised at the last minute that they could push to include rice, and jeopardise the entire deal, or agree to leave it out and go home with a solid deal. However, Cutler said the US would not allow that to become a precedent. Autos is another area that might prove problematic as the administration seeks approval in Congress. Reuters
The bilateral agreement, which officials announced over the weekend after a last-minute negotiating marathon, would be the biggest for the United States in 15 years. It must now be passed by Congress.
"It provides us an important foothold in Asia, the fastest growing region in the world," lead negotiator Wendy Cutler told congressional aides and business groups in Washington. Studies suggest it could add US$17 billion to US$44 billion to US-South Korean trade, already at US$78 billion a year.
Cutler also said the deal, only the second US free trade agreement with an Asian country after Singapore, could be a model for future deals. US negotiators are also holding talks on a trade deal with Malaysia.
Cutler and other officials see a domino effect. "There is a possibility that the Korean agreement will be a stepping stone to a wave of liberalisation in East Asia," Deputy US Trade Representative Karan Bhatia said.
He suggested that, in the intensely competitive Asian environment with highly mobile capital and trade, even marginal tariff advantages could alter production decisions.
While there has been talk of a US-Japan trade deal, US officials said recently the time is not right.
At least one analyst argued that the exclusion of rice from the agreement, a triumph for Korea, would actually lure other countries into negotiations with the United States because they would also like to continue to exclude highly sensitive goods. The deal's exclusion of rice is proof US negotiators did not get everything they wanted after 10 months of talks.
Culter said her team realised at the last minute that they could push to include rice, and jeopardise the entire deal, or agree to leave it out and go home with a solid deal. However, Cutler said the US would not allow that to become a precedent. Autos is another area that might prove problematic as the administration seeks approval in Congress. Reuters
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