Speeches and Transcripts

U.S.-Korea Relations: Transforming Northeast Asia

Alexander Vershbow
U.S. Ambassador to the Republic of Korea

Korea University,
GSIS International Conference Room
May 7, 2007

Thank you, Dr. Kim Byung-ki, for the warm introduction and for your kind invitation to speak before the faculty and students here at the Graduate School of International Studies.  It is a particular honor to be speaking today at “Go-ryeo Dae-hak-gyo,” or “Go-Dae” as it is known to locals, the only school recognized by the Ministry of Education and Human Resource Development in 2003 for its outstanding achievements in globalizing education.  There seems nowhere more appropriate to address my remarks about the transformative nature of the U.S.-ROK alliance than here at Korea University. 

I recently returned from a three-week trip to the United States where I met with American policymakers, academics, business leaders and students to discuss the ramifications of the Korea-U.S. Free Trade Agreement and ongoing Six-Party Talks.  I especially enjoyed the opportunity to travel with Ambassador Lee Tae-sik and to talk to college students and civic leaders around the country about the evolving U.S.-Korea relationship.  Sensing the genuine interest and optimism among our audiences, the enormity of what we had accomplished here in Korea dawned on me.  Having had the chance to step back and reflect over the past few months, I can state with confidence that we are at the threshold of a new era, not only in U.S.-Korea relations, but for all of Northeast Asia.

Before I continue, I would like to briefly address the recent tragedy at Virginia Tech University, which occurred while I was traveling with Ambassador Lee.  Upon hearing the news, I was shocked and saddened to learn that a disturbed young man who had been born in Korea was identified as the killer.  Consequently, Ambassador Lee immediately returned to Washington.  I know that Koreans were upset because of the murderer’s background, but I want to assure you that the United States does not hold Korea or Koreans responsible for this tragedy.  On the contrary, we very much want you to know that we consider the tens of thousands of Koreans studying in the U.S. to be real, living proof of our close cultural and geopolitical ties and look forward to strengthening these links.

Let me now turn to exciting developments in Korea.  Throughout modern history, outsiders’ conception of Northeast Asia centered on China and Japan, and Korea was often defined solely in relation to these twin powers.  However, times have changed.  Korea is now poised on the forefront, ready to play a role in shaping the economic and political dynamics of the entire Asian continent.  Believe me, policymakers, business leaders and media organizations around the world are taking notice of recent events on the Korean peninsula and truly appreciate and respect the talents and contributions of the Korean people. 

KORUS FTA and Korea’s Continuing Economic Evolution

Two basic principles have anchored our bilateral relationship for decades.  The first is the primacy of the security relationship – our defense alliance – in our overall relations.  The second principle is based on an export-led, somewhat import-resistant, economic model that Korea followed during its period of rapid industrialization to protect its infant industries.  However, the KORUS FTA adds a new element to our bilateral relationship.  It shows that both countries have made a commitment to strengthening an alliance that is now centered on economics as much as on military security, and they have demonstrated a shared interest in opening trade borders as the key to future growth.  Through this historic FTA, Korea blazes a trail, a path toward peace and prosperity, for all of Northeast Asia.     

The KORUS FTA reflects Korea’s economic transformation and its continuing drive for economic leadership.  Before looking forward to what the KORUS FTA will mean to Korea, let us look back for a moment to recall how far Korea has come.  In a recent speech before the African Union, UN Secretary-General Ban Ki-moon recalled that post-war Korea was a shattered, impoverished land with few economic prospects.  In 1953, Korea’s per capita income was $67, and it received $194.2 million in foreign economic aid.  Today, the Republic of Korea is the world’s 11th largest economy with a per capita income of over $18,000.  Korea gave away $423.3 million in overseas development assistance in the most recent year for which such data is available.  Many years of toil and sacrifice by the Korean people helped create today’s economic powerhouse.  Korea’s economic transformation has become a singular example of rapid and sustained development for developing nations all over the world.

In the early 1970s, when Korea suddenly shifted to rapid industrialization in sectors such as steel, chemicals, automobiles, shipbuilding and electronics, there were many doubters, including U.S. economic advisors and multilateral institutions like the IMF.  The experts argued at the time that there was worldwide overcapacity in these industries and that the Korean domestic market was too small to absorb the new production.  However, leaders from Korea’s government and private industries sprung up virtually overnight in response to this great challenge.  During this period, the Korean government followed a developmental model of high tariffs and infant-industry protection that paralleled the early industrialization experiences of other countries, including the United States.

What made South Korea’s “economic miracle” unique was, first, the speed of its industrialization, which took place in a single generation, and second, Korea’s continuing evolution through successive waves of targeting new economic sectors for concentrated investment.  Korea never seems to stop reinventing itself.  In many high-tech and knowledge-intensive fields, it has reached the cutting edge in today’s highly competitive world through its abundant supply of human capital – truly punching above its weight for a country of its size.  The term “Asian Tiger” comes to mind.  (How appropriate that the tiger also happens to be Korea University’s mascot!)

In recent years, Korea’s economic policy has undergone a paradigm shift in gradually embracing foreign imports and investment.  Over the last ten years in particular, this new approach has spawned regulatory reforms in a number of sectors, particularly financial services and communications. These reforms have resulted in an explosion of foreign investment and a greater availability of imported goods in Korea.  Even before the FTA, the United States has been a key supporter of Korea’s greater openness to foreign trade and investment.  In 2006, the United States was Korea’s third largest trading partner and Korea was America’s seventh largest trading partner.  The United States is still Korea’s top foreign investor in terms of the total amount of direct investments (although Japan invested more overall during 2006).  Bilateral trade between our two countries totaled more than $78 billion last year.   

The KORUS FTA represents the culmination of Korea’s shift toward opening trade borders and embodies each nation’s confidence in the strength of its own industries.  In the spirit of competitive markets, tariffs on 94% of trade in consumer and industrial products will drop to zero within three years of the FTA’s implementation.  However, it is important to note that the outcome of the negotiations did not result in a one-sided arrangement.  Both sides made compromises to reach this historic agreement.  The final product is a carefully balanced agreement that takes the sensitivities of both sides into account.  The KORUS FTA will benefit the consumers of both nations, while providing longer phase-ins and other safeguards for sensitive sectors.  By creating a more welcoming climate for foreign investment and initiating pro-business regulatory reforms, the agreement should help Korea’s efforts to become a Northeast Asian “hub” in many industries.  In short, the KORUS FTA will play a key role in sustaining Korea’s economic miracle well into the 21st century.   

Six-Party Talks: Transforming Political Relations in NE Asia

Another important area of cooperation between South Korea and the United States is our joint effort to denuclearize North Korea within a multilateral framework.  The United States regards the Six-Party Talks as the best way to achieve this goal because the Six-Party approach makes clear that North Korea’s nuclear weapons are a threat to all of Northeast Asia.  The problem is not just a problem for the Korean peninsula, nor can it be reduced to a bilateral dispute between the United States and the DPRK.

The Six-Party Talks have made important progress.  On September 19, 2005, the six nations signed a “Joint Statement” in which North Korea committed to abandoning all its nuclear weapons and existing nuclear programs and the other countries agreed, in return, to provide security assurances, economic assistance, normalization of political relations, and the conclusion of a permanent peace regime for the Korean Peninsula.  On February 13 of this year, the six parties agreed on a series of “Initial Actions” to implement the September 2005 Joint Statement.  In the first phase, North Korea agreed to shut down and seal its Yongbyon nuclear facility, under international supervision, in exchange for energy and other assistance.

As you are aware, the first 60 days following the February 13 agreement, which ended on April 14, passed without North Korea shutting down its Yongbyon facility.  Unfortunately, there has been a long delay regarding the transfer of funds to North Korea from its Banco Delta Asia (BDA) accounts in Macao.  I won’t go into the technicalities, but I can assure you that: (1) the United States fulfilled all its obligations to resolve the BDA case and we have removed all objections to North Korea’s moving its funds out of its Banco Delta Asia accounts; and (2) North Korea’s difficulty in moving the funds is symptomatic of its undeveloped and often illegitimate relationship with the international financial community. 

Despite the difficulties, the North Koreans’ own statements in recent weeks give us hope that they will honor their commitment to shut down the Yongbyon nuclear facility.  If North Korea complies with its obligations, South Korea will provide an initial contribution of energy assistance in the form of 50,000 tons of heavy fuel oil. 

We really want to restore the momentum to implementation of the February 13 agreement, since there is even more work to be done in the next phase of the process: the disablement of all DPRK nuclear facilities, and a complete declaration by the North of all its nuclear weapons and programs that are ultimately to be eliminated in the third and final phase.  As the February 13 agreement states, the other parties will provide additional economic and energy aid if the North fulfills its obligations.  The United States is also prepared to work, step by step, toward normalizing our bilateral relations with the DPRK.  But all these steps are clearly linked to performance by the North Koreans in fulfilling their commitment to denuclearize. 

Let me add that the United States supports inter-Korean engagement and reconciliation.  We believe that the denuclearization of the Korean peninsula will be critical to the goal of normalizing relations between the two Koreas and laying the basis for peaceful unification in the longer term.  Denuclearization will make it possible to conclude a permanent peace regime to end the Korean War and reduce tensions on the peninsula.  This will, in turn, make it easier to encourage the North to undertake much-needed economic, political and human rights reforms that could ease the plight of the North Korean people. 

So, despite the many hurdles and delays, the Six-Party Talks are not just a about resolving the North Korean nuclear issue.  They are the first step toward engaging with and, ultimately, bringing North Korea out of its self-imposed isolation.  However, North Korean leaders must show a willingness to abide by international norms of behavior and fulfill their obligations to denuclearize in accordance with the September 2005 Joint Statement and the February 13 agreement.  If they do, the benefits for the North Korean people, and for everyone in Northeast Asia, will be enormous.  Indeed, there is no reason why North Koreans cannot eventually participate in the new economic growth engine generated by the KORUS FTA.  Our negotiators are tirelessly working with diplomats from South Korea and other nations to make this dream a reality.

A New Generation of Leaders

Before I close, let me return to the relationship between the United States and the Republic of Korea.  As in the past, a new generation of “tigers” from the public and private sectors of both countries must continue the momentum generated by joint U.S.-ROK accomplishments such as the KORUS FTA.  Looking at today’s audience, I know there are many young, energetic people out there who will shape the U.S.-Korean relationship in the years ahead..  You represent the best and brightest that Korea has to offer.  Thank you for preparing yourselves to shoulder the responsibility of leadership, whether your dreams lie in public policy, international business, journalism or some other field. 

Aside from trade, it is important that America and Korea continue the cultural and educational exchange that has strengthened the bonds between our countries over the years.  Nowhere is this strength of this exchange more evident than in the over two million Korean-Americans living in the United States and the roughly 100,000 Americans residing in the Republic of Korea.  During fiscal year 2006, the U.S. Embassy in Seoul processed more than 450,000 visas and is on track to process more than half a million visas this year.  Over 93,000 students of Korean citizenship are currently studying on student visas in the United States at the high school and university levels, making Korea once again the largest source of non-immigrant students – ahead of much bigger countries like India and China. 

I am very eager to lose the distinction of heading the U.S. Embassy that has the largest visa-issuing operation in the world.  Toward this end, our two governments are working to facilitate Korea’s entry into the Visa Waiver Program.  President Bush has asked our Congress to pass legislation that would expedite Korea’s admission into the VWP, and draft bills are now being considered by the Senate and House of Representatives.  While I cannot predict when Koreans will be able to travel to America for short-term tourism and business without a visa, I am confident that this day will come soon.  After all, it was not very long ago that the conclusion of the KORUS FTA seemed so far away.

I feel extremely positive about the present state of U.S.-Korea relations and am more than optimistic about the future.  Born during the early years of Cold War confrontation, our alliance now works toward promoting our shared values of liberty, democracy, human rights, free markets, and the open exchange of ideas.  Korea is now an important global partner for the United States, and a respected global leader in its own right.  

In conclusion, I would like to wish Korea University the best of luck in achieving the goal of the “Global KU Project,” of being ranked among the world’s top 100 universities by 2010.  Considering that KU was ranked 150th worldwide in 2006 by a leading publication, this goal seems eminently attainable.  I challenge you to channel the competitive zeal, which seems to come so naturally to Koreans, into making your university and also your country among the best in the world.  As Koreans like to say to encourage one another, “Fighting!”  Best of luck to all of you.