Deputy Secretary's Speech

U.S. Acting Deputy Secretary of Commerce David A. Sampson
U.S.-Korea Business Council Luncheon
U.S. Chamber of Commerce
Washington, D.C.

Chairman Rhodes, Mr. Ambassador, ladies and gentlemen, good afternoon and thank you for your warm welcome. On behalf of President Bush and the U.S. Department of Commerce, it is a great pleasure to be with you today. I want to begin by thanking the U.S.-Korea Business Council for hosting this meeting. And I would also like to welcome all of you who have traveled great distances to be here.

As we meet today, there is a great reason to be optimistic about our relationship. We’ve been good allies and friends for many years. We share many common goals: combating terrorism, promoting democracy, encouraging stability in Asia and beyond, and building strong economic ties.

Just a few weeks ago, President Bush and President Roh met in the Oval Office. They had a great meeting on a broad range of topics. And they plan to meet again in the fall for the APEC leaders summit.

Last month, I met with Korea’s commerce minister, Minister Lee. We had a productive visit and talked at some length about our trade relations. I look forward to working with him in the future.

Today, I want to talk broadly about how we can make our commercial relationship stronger and deeper. Wendy Cutler from the U.S. Trade Representative’s Office will talk with you later about the specifics.

I can report to you that we held our regular working level trade meetings last week in Seoul. And I’m told the meetings went well.

These quarterly talks are an effective mechanism for resolving trade disputes and advancing the dialogue between our two countries. Last week was no exception.

There was focused discussion on a number of key areas. Most notably, we talked about specific actions the Korean government could take to resolve longstanding issues.

While we don’t expect to fix all the problems overnight, we do need to see real, demonstrable progress on resolving these issues. And if we do see progress, we’ll be in a better position to determine whether to begin negotiation of a free trade agreement (FTA) with Korea.

Our main concerns include the lack of transparency, and continued government intervention in the marketplace.

Let me explain.

As you all know, businesses rely heavily on predictability in the markets in which they operate. That makes transparency a cross-cutting issue that affects everyone. While Korea has made some improvements, we have heard from U.S. industry that Korea’s current lack of transparency is a major factor in causing an unpredictable and unstable business environment.

For example, Korea’s process for setting and adjusting reimbursement prices for innovative drugs lacks input from the global pharmaceutical business. It’s hard to imagine how prices can be fairly set without consulting manufacturers.

Additionally, Korea’s rule-making process needs to be more open.

We also need to see less government intervention in the marketplace, which we made clear at the quarterly trade meetings last week.

For example, there are restrictions on foreign investment in the telecommunications market. Lifting these restrictions would benefit not only our companies but would help Korea achieve its goal of attracting more foreign investment.

Another concern is the extensive screen quota system that limits the number of days a foreign film can be shown in Korean movie theaters. We have no such system in the United States. Korea needs to work with its industry on a better system. And we strongly agree with President Roh and other Korean officials that the screen quota should be reduced.

We are also very interested in working together, in a transparent and science-based manner, to reopen the Korean market to U.S. beef. We hope talks led by our USDA that are now underway will result in a lifting of the ban.

These and other trade issues need resolving sooner rather than later. From the long-standing problem of Korean barriers to auto imports from the U.S. to stronger protections for intellectual property, the agenda is quite full.

I know that all of you are very interested in the prospects for a U.S.-Korea FTA. And until recently, the idea of one was virtually inconceivable.

I am pleased that we are at a stage where we can frankly discuss the challenges that -- with some hard work -- can be overcome to accomplish this once seemingly impossible goal. I’m hopeful that we’ll see progress by our next round of quarterly trade meetings.

There is good reason for optimism.

Korea’s economy is remarkable. It bounced back from the 1997-98 financial crisis, and once again is growing rapidly. Korea is East Asia’s third largest economy, with GDP growth of 4.6% in 2004. And President Roh wants to grow per capita GDP to $20,000 by 2010, an increase of two-thirds from what it is today. That’s an admirable and aggressive goal.

President Roh is making important strides toward his goal of making Korea an economic hub for Northeast Asia. His calls for liberalizing foreign exchange and capital transactions, easing regulations in designated economic zones, and improving infrastructure will help even more. The Bush Administration fully supports his agenda.

If these reforms are successful, Korea will have a more favorable business climate that includes greater transparency, better protection for intellectual property rights, improved regional security, and sustainable economic growth.

In closing, let me say that everyone in this room who wants to see a free trade agreement between our two countries has a vital role to play. You are part of the solution.

If we are to move forward, there must be strong support in both of our countries for such an agreement. People in and out of government need to hear from you about the benefits of free (and fair) trade. They need to know that it’s in their interest to resolve our longstanding trade issues. They need to know the people want to see results.

Winning political support for free trade has never been a slam dunk. Today we see the forces of isolationism and protectionism at work against the U.S. free trade agreement with Central America (CAFTA) and Korea’s FTA with Chile. These can be very powerful forces indeed.

But they can be countered by explaining the facts that free trade has in promoting growth, prosperity and freedom. That’s why it’s so vitally important that you speak out about the virtues of free and fair trade.

By doing business in Korea you are advancing democratic values, the rule of law, and respect for property rights and individual freedoms across Korean society. In my view, that makes you the true heroes of our economies. You’re taking risks. You’re investing. You’re creating opportunity, jobs and prosperity.

President Bush and I appreciate everything you are doing. And I look forward to working with all of you.

Thank you very much.