Deal, or no deal?

March 30 is throw-down time for a U.S.-Korean free trade agreement (FTA). Any agreement must be concluded by then in order to allow for the 90-day review

March 30 is throw-down time for a U.S.-Korean free trade agreement (FTA). Any agreement must be concluded by then in order to allow for the 90-day review period ahead of the expiration of President Bush's trade promotion authority (TPA) on June 30. TPA allows the administration to negotiate trade deals with only an up or down vote by Congress.

As this March issue went to press, negotiators for the two countries were scurrying between Seoul and Washington trying to hash out sticking points on an FTA. Among the big ones is the easing of South Korea's zero tolerance on bone fragments in U.S. beef shipments. The discovery last fall of tiny bone fragments in a few packages of three shipments of U.S. beef served to essentially reshutter the market that reopened last year after a two-year closure.

A resolution to the issue is said to be critical to the forging of a bilateral FTA that both sides feverishly want. It would be the second largest for the U.S., and the largest for Korea.

South Korea had been the third-largest importer of U.S. beef before it imposed a full ban in December 2003 following discovery of BSE in a cow of Canadian origin. Seoul agreed in January 2006 to resume imports of only boneless beef from cattle 30 months of age and younger, a deal the U.S. accepted in hopes of a full reopening later.

Poker strategies

Though the beef discussions aren't technically part of the FTA negotiations, Assistant U.S. Trade Representative Wendy Cutler said in January that failure to achieve a full reopening was an FTA deal breaker, a position prodded by cow-state legislators. Later statements from the office seemed to suggest a softening in that stance, however, which some suggest is a ploy to weaken the issue as a bargaining chip in the minds of the South Koreans.

Meanwhile, two camps have developed on the South Korea side. Ambassador Kim Jong-hoon, Cutler's counterpart in the FTA talks, has pronounced publicly that bones aren't inherently dangerous, finally echoing what the world scientific community has contended for some time now. But South Korea's vice minister of agriculture and forestry, Park Haesang, told reporters just prior to the early February negotiations that his government intended to stick to its principle of only boneless beef.

Hunkering down

At press time, it looked like the Koreans were drawing in for a siege, with the announcement of the formation of a task force of “government quarantine experts.” According to Yonhap News, the task force was girding itself to counter further beef-import pressure expected from the U.S.

On Feb. 9, Lee Sang-kil, director general at the Ministry of Agriculture and Forestry's livestock bureau, said Korea's position on maintaining a zero tolerance on bone fragments was unchanged. He said Seoul will also continue to conduct x-ray screenings of all shipments entering the country to check for bones.

But he also added that South Korea had offered not to reject entire shipments just because one or two individual packages contained bone fragments.

It's all part of a high-stakes poker game that includes the usual bluffs, raises and calls, with the final hands to be laid down by the end of March. It will be very interesting to see if the U.S. learned anything from its weak performance in the hand that produced the boneless beef agreement early last year.