VZCZCXYZ0001
OO RUEHWEB

DE RUEHUL #0809/01 0730210
ZNR UUUUU ZZH
O 140210Z MAR 06
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6561
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY 1368
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHKO/AMEMBASSY TOKYO 0333
RUEHBJ/AMEMBASSY BEIJING 0250
RUEHGV/USMISSION GENEVA 1757

UNCLAS SEOUL 000809 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PASS USTR FOR BHATIA, CUTLER, AUGEROT AND KI 
STATE FOR EAP/K AND EB/TPP/BTA 
COMMERCE FOR 4431/ITA/MAC/OPB/EAP/MORGAN 
 
E.O. 12958: N/A 
TAGS: ETRD ECON SCUL PGOV KS
SUBJECT: KOREA FTA: PREPARATORY DISCUSSIONS ON TRACK 
 
 
SUMMARY 
------- 
 
¶1. (SBU) On March 6-8 an interagency team led by Assistant 
U.S. Trade Representative Wendy Cutler made substantial 
progress in laying the procedural groundwork for U.S.-Korea 
Free Trade Agreement (FTA) talks, the first round of which 
will be held during the week of June 5 in Washington.  The 
U.S. delegation and their Korean counterparts had a useful 
discussion on a wide range of procedural issues, including 
the number and subject matter of the FTA negotiating groups, 
confidentiality of negotiating documents, and participation 
 
SIPDIS 
of non-government officials in the formal negotiations.  The 
Korean side confirmed that they would provide their 
negotiating texts to the United States in early May, around 
the same time that the USG plans on submitting its texts to 
Korea.  Korean Chief Negotiator Ambassador Kim Jong-hoon 
plans to visit Washington in April to finalize agreement on 
the outstanding procedural issues. 
 
¶2. (SBU) In side meetings, Cutler met with top officials 
from the Blue House, the Trade and Finance Ministries, U.S. 
and Korean business leaders and leading think tanks, as well 
as with concerned members of the National Assembly, for 
useful discussions concerning public outreach and managing 
each nation's perceptions of the potential benefits and 
risks of the FTA negotiations.  Cutler's speech to the 
American Chamber of Commerce, highlighting the benefits of 
the FTA for both economies, received widespread and mostly 
favorable coverage in the local media.  End Summary. 
 
ESTABLISHING FTA MODALITIES AND PROCEDURES 
------------------------------------------ 
 
¶3. (SBU) The primary purpose of AUSTR Cutler's successful 
March 6-8 visit was to lay the procedural groundwork for the 
U.S.-Korea FTA negotiations, which will be critical to 
successful conclusion of the agreement.  To that end, AUSTR 
Cutler and her delegation, including officials from USTR, 
the Departments of State, Commerce and Agriculture, and the 
Embassy, met for three hours with Korean Chief Negotiator 
Ambassador Kim Jong-hoon and his team on March 6, to discuss 
modalities and procedures for the negotiation of the FTA. 
The two sides had a useful discussion on key procedural 
issues, including the number and subject matter of the FTA 
negotiating groups, confidentiality of negotiating 
documents, and participation of non-government officials in 
the formal negotiations. 
 
¶4. (SBU) The two sides reached agreement on a time schedule 
for the negotiating rounds, as follows: 
 
April: Visit by Ambassador Kim Jong-hoon to Washington to 
finalize modalities and procedures 
 
May 4: 90-day consultation period expires, two sides 
exchange draft texts in early May 
 
Mid-May: Working level MOFAT visit to Washington to meld 
texts and construct brackets 
 
June 5-9: First Negotiating Round, in Washington 
 
July 10-14: Second Negotiating Round, in Seoul 
 
September 11-15: Third Negotiating Round, in United States 
 
October 23-27: Fourth Negotiating Round, in Korea 
 
December 4-8: Fifth Negotiating Round, in United States 
 
¶5. (SBU) The Korean side also provided a list of their 
negotiators for the FTA, which included representatives from 
the Ministry of Foreign Affairs and Trade (MOFAT), Ministry 
of Agriculture and Forestry (MAF), the Ministry of Commerce, 
Industry and Energy (MOCIE), the Ministry of Information and 
Communications (MIC), the Fair Trade Commission (FTC), the 
Ministry of Culture and Tourism (MOCT), the Ministry of 
Labor (MOL), and the Ministry of Finance and Economy (MOFE). 
The Koreans confirmed that they intend to provide their own 
negotiating texts in early May, around the same time that 
the United States is planning on submitting its texts to the 
Koreans. 
¶6. (SBU) Discussion on the composition of the FTA 
negotiating groups was fruitful but less conclusive, and the 
meeting concluded with agreement by both sides to further 
consult in capitals in an effort to reach a resolution of 
the issue.  The United States presented its prior practices 
for maintaining text confidentiality in FTA negotiations to 
determine if they would meet the needs of the Koreans.  The 
two sides agreed to continue discussions regarding 
confidentiality concerns to find a mechanism that would be 
 
SIPDIS 
acceptable to both parties.  The Korean delegation also 
expressed concern about the USG's proposed blanket ban on 
participation by non-government personnel during the 
negotiations, saying that they hoped to have government- 
affiliated think tank experts and contracted private lawyers 
joining the talks as observers and advisors.  Discussion on 
that will continue as well. 
 
¶7. (SBU) AUSTR Cutler also stressed during the meeting that 
she is under instructions to complete substantive 
negotiations by the end of 2006.  The Korean side indicated 
that they could make a best-effort commitment toward that 
goal, but hesitated to set the end of 2006 as a public 
target date, fearing that would exacerbate public concern in 
Korea that the United States is railroading concessions in 
the FTA talks. 
 
MEETINGS WITH SENIOR OFFICIALS 
------------------------------ 
 
¶8. (SBU) The Ambassador joined AUSTR Cutler for an hour-long 
meeting with Trade Minister Kim Hyun-chong.  Cutler and Kim 
reviewed recent developments in media reporting on the FTA, 
and Cutler specifically complained about MAF Minister Park 
Hong-soo's statements that liberalization of rice and beef 
imports would not be included in the FTA.  Cutler and Kim 
agreed that it would be important for both sides to continue 
to avoid the temptation to be too explicit about explaining 
their negotiating positions in the press, so as to avoid 
undermining public consensus behind the agreement on both 
sides of the Pacific.  While some background noise is 
unavoidable, given the need for public transparency, 
Minister Kim pledged to minimize his own statements on the 
FTA beyond generic cheerleading concerning the benefits of 
the FTA for both economies. 
 
¶9. (SBU) In a separate meeting, Presidential Economic 
Advisor Chung Moon-soo emphasized President Roh Moo-hyun's 
strong support for the FTA, highlighting the President's 
recent statement that conclusion of the FTA was among his 
top two priorities for the remaining two years of his 
tenure.  Chung told Cutler that the President's FTA policy 
is threefold: 
 
-- Achieving a balanced, high-quality result, to garner 
public and National Assembly support; 
 
-- Not allowing interest group pressure to cause 
negotiations to fail; and 
 
-- At the same time, not agreeing to concessions that exceed 
Korea's (unstated) bottom line. 
 
Chung explained that the Korean public is anxious about 
concluding an FTA with a much "larger and stronger" partner, 
and therefore concerned that the talks will be a one-way 
street. 
 
¶10. (SBU) Ministry of Finance and Economy (MOFE) Vice 
Minister Kwon Tae-shin explained to AUSTR Cutler the role 
that Deputy Prime Minister Han Duck-soo will play in 
reaching consensus on negotiating positions within the 
Korean government.  Han, for example, played the leading 
role in the decision to lower Korea's screen quota trade 
barrier prior to the announcement of FTA talks.  Kwon 
reiterated his ministry's strong support for the FTA as a 
process that can help upgrade the Korean economy in many 
ways.  On a sectoral basis, MOFE will be most involved in 
the financial services negotiations.  MOFE hopes that its 
recent efforts to push forward another round of financial 
regulatory reforms will help ease FTA negotiations in that 
sector. 
 
OUTREACH TO ASSEMBLY, ACADEMICS AND PRIVATE BUSINESS 
--------------------------------------------- ------- 
 
¶11. (SBU) AUSTR Cutler met with key National Assembly 
supporters of the FTA, from both sides of the aisle, during 
a dinner hosted by the DCM.  Cutler encouraged the 
Assembly's "FTA Forum" to be active throughout the year in 
promoting the FTA.  Uri Party Foreign Affairs Chairman Chung 
Eui-yong responded that the Forum is working hard to 
increase its membership from the current 21 members (there 
are 299 members in the unicameral Korean National Assembly). 
Chung also indicated that the Forum hopes to organize a trip 
to Washington during May 2-4 to meet with counterparts in 
the U.S. Congress to discuss the FTA. 
 
¶12. (SBU) In other meetings, senior staff from the Korea 
International Trade Association (KITA) told Cutler over 
breakfast that the organization is leading a coalition of 
Korea's five major business organizations to support the 
FTA.  Thus far, their public outreach has included newspaper 
advertisements and press conferences.  Separately, Korea- 
U.S. Business Council Chairman (and Hyosung Group Chairman) 
S.R. Cho told Cutler of his plans to leverage the June 20-22 
meeting of the U.S. and Korea councils to underscore 
business community support for the FTA.  In a free-ranging 
discussion with top academics from Korean universities and 
think tanks, the trade policy experts told AUSTR Cutler that 
it will be a constant struggle to keep the Korean public 
from focusing on the loud minority economic "losers" from 
the FTA, rather than the silent majority "winners."  In all 
these meetings, Cutler emphasized that the U.S. experience 
with promoting trade policy in an active democracy dictates 
that it is imperative for supporters to be vocal about the 
broader benefits of the FTA for Korea's economy and society, 
including the benefits for consumers.  It is also critical 
for that drumbeat to be maintained throughout the process, 
all the way from announcement through the negotiations to 
ratification. 
 
OUTREACH TO U.S. BUSINESS AND THE MEDIA 
--------------------------------------- 
 
¶13. (SBU) Cutler's first meeting in Seoul was a roundtable 
with the Executive Committee of the American Chamber of 
Commerce.  The Chamber is highly supportive of the FTA, and 
has been conducting numerous outreach activities.  At the 
same time, AmCham's membership is concerned about obtaining 
high-quality outcomes from the FTA negotiations, 
particularly in the autos and pharmaceuticals areas. 
 
¶14. (SBU) Cutler's on-the-record luncheon speech to the full 
AmCham membership later in the week was attended by 200 
individuals and covered widely throughout the Korean media. 
The speech, which emphasized the benefits of the FTA for 
both economies, while flagging the tight timeline for 
achieving success, was widely quoted throughout the media. 
Most press accounts were accurate, although two newspapers 
chose to interpret AUSTR Cutler's response to one question 
as indicating an unyielding USG stance toward the 
negotiations.  The speech and Q&A have been posted on the 
Embassy website in both English and Korean at: 
http://usembassy.state.gov/seoul/rok20060307. html. 
 
VERSHBOW