2/27/2007

Korea Audit Board to Audit FTA Negotiations

According to a report in the Donga Ilbo on Feb. 27, 2007 the Board of Audit and Inspection (BAI) will audit ongoing Korean-US FTA negotiations. Seemingly, the BAI intends to assuage inter-minister disagreements. The Chairman of the BAI is Jeon Yun-churl, former Deputy Prime Minister and Minister of MOFE during the Korea-Chile FTA negotiations. Chairman Jeon is considered to have been very instrumental in pushing through the Chile FTA.  A brief excerpt of the story appears below. 

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Audit Board Will Look Over FTA Negotiations
FEBRUARY 27, 2007 Donga Ilbo (TRANSLATION)

The Board of Audit and Inspection of Korea (BAI) has decided to audit the ongoing Korea-US (KORUS) FTA negotiations by implementing a monitoring system.

With regard to the issue of U.S. beef inspections, the BAI attributed the stagnant FTA negotiations to inter-ministerial discord.

“While listening to the explanation of Korea’s chief negotiator Kim Hyun-jong, I thought there were several problems in the negotiations. After assessing the negotiation process on Korea’s side, we will provide solutions for the troublesome parts,” said Chairman Jeon Yun-churl during an interview with this paper.
“Difference of opinions among the Ministry of Finance and Economy (MOFE), the Ministry of Commerce, Industry and Energy (MOCIE), and the Ministry of Agriculture and Forestry (MAF) seemed to have affected the KORUS FTA negotiations. BAI’s announcement means that the board will present appropriate alternatives by setting up a monitoring system if the ministries fail to reach an agreement,” said an official of the BAI.

The issue of U.S. beef inspections is not an official agenda in the FTA talks, but Washington says its resolution is a precondition for reaching an agreement.
Therefore, many people argue that the Korean government should push for the conclusion of the beef issue by achieving a ministerial consensus.

Currently, the MAF only allows imports of U.S. beef with no bone chips after a full inspection, while U.S. Department of Agriculture maintains that even beef with bone chips should be allowed because it is not a safety threat. With this wide gap of opinions, negotiations are making little progress.

In the meantime, the MOCIE and MOFE are reported as hoping that the MAF will have a flexible attitude on the beef issue because it is becoming an obstacle to the FTA negotiations over textile, automobile, and trade remedies.

Chairman Jeon played an instrumental role in concluding the Korea-Chile Free Trade Agreement as deputy prime minister and head of MOFE during the Kim Dae-jung administration. Regarding the BAI’s monitoring plan, some expect that Chairman Jeon will present alternatives to the beef inspection issue from a broader viewpoint, as he acknowledges the necessity of a KORUS FTA.
When Korea-Chile FTA negotiations, which started in December 1999 were at a stalemate due to concerns over damage to Korean farmers after opening the agricultural market, former minister of Finance and Economy Jeon asserted the necessity of the FTA, coordinating different opinions of related ministries such as the MOCIE and the MAF. After three years of negotiations, a Korea-Chile FTA was concluded in October 2002.
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SeanHayes@ipglegal.com