U.S., South Korea Make "Reasonable Progress" on Free Trade Talks

Two sides agree on schedules to phase out certain tariffs, U.S. official says

By Peggy B. Hu
Washington File Staff Writer

Assistant U.S. Trade Representative Wendy Cutler during a press briefing in Seoul July 14. (© AP/WWP)

Washington -- U.S. and South Korean negotiators made "reasonable progress" during the second round of talks on a free trade agreement (FTA) between their countries, according to Assistant U.S. Trade Representative Wendy Cutler.

"We agreed on the time frames for tariff phase-outs for industrial goods, which is a very significant step, and we are nearing agreement on the time frames for tariff phase-outs for agricultural and textiles goods, setting the stage for the exchange of tariff offers by mid-August," Cutler said in July 14 remarks in Seoul, South Korea.

Cutler said that negotiations on pharmaceuticals "did not go as planned" during the round.

"Going into these negotiations, we had agreed to establish a dedicated working group to discuss pharmaceutical trade issues," she said.  "To our surprise, upon our arrival in Seoul, we were informed that Korea was going to switch to a positive list system for the reimbursement of pharmaceutical products before we had the opportunity to have meaningful negotiations on these issues."

The planned switch would require government approval for reimbursing any new medicine or medical device, potentially giving advantage to generic drugs made by Korean companies over innovative treatments coming mostly from the United States, Europe and Japan.  The current system automatically authorizes government reimbursement for medicines and medical devices unless the government specifically excludes them from a list of products.

"In our view, the decision to proceed with this plan is inconsistent with both the mandate of the Pharmaceutical Working Group and the market-opening spirit of the FTA," Cutler said.

Cutler stressed that the United States is not challenging "the basic premise of Korea's national health care system nor are we trying to block reform."  However, she said, "[A]ny reform should be transparent and fair, and not disproportionately target foreign pharmaceutical products."

The U.S. trade official expressed hope the two sides would be able to reduce differences on the pharmaceutical sector and said she would be working with her Korean counterparts "to get things back on track" by the third round of talks, which are scheduled for the week of September 4.

"We're dealing with some tough issues, and none of us thought this was going to be easy. But our two countries have strong and deep ties, and we've both put together great negotiating teams," she said.

The United States has completed FTAs with Australia, Bahrain, Chile, Israel, Jordan, Morocco and Singapore.  It also has signed an FTA with Central American nations and the Dominican Republic and is negotiating FTAs with Malaysia and Panama in addition to South Korea.

"This FTA is an important opportunity that offers both countries real benefits. It's the right thing to do, and we're going to work hard to make these negotiations a success," Cutler said.

For more information on U.S. policies, see Trade and Economics and East Asia and the Pacific.