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WASHINGTON: South Korea has pledged to halve its domestic film quota, paving the way for formal negotiations on a free trade agreement with the US that look set to be launched soon.
Coming on the heels of Seoul's decision to resume imports of American beef, the latest announcement that Korean cinemas would be required to show local films for only 73 days a year lowered one of the biggest remaining hurdles to starting FTA talks.
"As a country whose external economic dependence exceeds 70 per cent, we have no choice but to join the global free trade trend," Han Duck-soo, finance minister, said. "The wave of free trade has consistently asked for changes in our screen quota system."
"By reducing the screen quota and allowing beef imports, two of the major hurdles have been eliminated, so the atmosphere for launching the FTA has ripened," said a senior South Korean trade official .
Senator Max Baucus, the top Democrat on the Senate finance committee, told reporters in Washington on January 25 that he had been notified by the US Trade Representative's Office that the US was set to launch negotiations with Korea. But Rob Portman, the US Trade Representative, said in Davos, Switzerland, recently that the two sides still had some issues to resolve. I am hopeful we can do it soon," he said.
After a series of deals with smaller countries, Washington is now considering FTAs that will be considerably harder to conclude. The US is in the midst of difficult talks with Thailand, another big Asian trading partner, and has put on hold for the moment discussions to launch talks with Switzerland and Egypt.
"I think it will be one of the most difficult negotiations we've ever done," said Nao Matsukata, a trade lawyer at Hunton & Williams in Washington and a former policy planner at USTR. South Korea maintains high import barriers, particularly in agriculture and cars, both key sectors for US exporters.
But a deal with Korea, Asia's third-biggest economy, would give the US an important economic bridge head into the region at a time of growing concern in Washington that the recent wave of regional trade initiatives in Asia could jeopardise US commercial interests there. With bilateral trade exceeding $70bn, South Korea is the US's seventh largest trade partner.
Preparatory trade talks have been taking place for several months and the two governments had hoped to announce the start of formal talks during the Asia-Pacific Economic Co-operation forum in November, but they have been bogged down over issues including beef, pharmaceuticals and cars.
Hollywood was particularly concerned about Seoul's requirement, dating from 1966, that Korean cinemas show Korean films for 146 days a year. Critics said the requirement was not necessary because domestic films accounted for 59 per cent of the market anyway. The Korean finance ministry said this would be halved from July 01. The Motion Picture Association of America called the deal "a significant step forward".
Seoul and Washington have tentatively planned to launch formal negotiations on February 02. Seoul must hold a public hearing before it can launch the talks, while Washington needs the approval of Congress. The hearing will be held in Seoul on February 02, leaving time for the launch later that day in Washington.
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FT Syndication Service
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