Speeches and Transcripts

"State of U.S.-Korea Relations – 2008 and Beyond"

Remarks to Members of the
American Chamber of Commerce in Korea

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

Grand Hyatt Hotel, Seoul – March 10, 2008

Chairman Bill Oberlin, President Tami Overby, members of the AmCham Board, AmCham members and guests:  Thank you for the opportunity to offer my perspective on the state of our bilateral relations.   A year ago, as I gave a similar speech to this audience, we were pressing for breakthroughs in the KORUS FTA negotiations and urging our Korean partners to marshal the political will to seal the deal.   A year ago, the Korean campaign landscape was awash with candidates and the future direction of Korea remained very much unclear.  A year ago, no one would have imagined the Star Spangled Banner being played by the New York Philharmonic in the heart of Pyongyang, drawing global attention.

What a difference a year makes.  This has been a year of remarkable change, with the successful conclusion of the KORUS FTA negotiations, a decisive political victory by President Lee Myung-bak, and twists and turns in our relations with North Korea.  However, in looking back on the past year, it’s equally important to keep in mind the “constants” in our bilateral relationship:  namely, our solid U.S.-ROK strategic alliance; our joint work toward a peaceful and nuclear-free Korean peninsula; our mutual commitment to raising standards of living on both sides of the Pacific; and of course, our common belief in democratic institutions.  In my remarks today, I’ll aim to highlight both perspectives – the change and continuity in our relationship.       

Facing a field of ten candidates, President Lee Myung-bak was elected with over 48% of the vote on a program of promoting growth, opportunity, and closer ties with the United States.   The transparency and liveliness of the elections are a strong testimony to Korea’s democratic foundations.  While the United States can’t claim quite the same synchronized dance routines and raucous sing-alongs that take place at Korean campaign rallies, we have our share of aspiring musical talent when it comes to campaign time: although he just dropped out of the race, Gov. Huckabee is a rock-and-roller after my own heart.   But whether it’s dance routines or bass guitar riffs, what is happening in both countries is that the population has become energized and engaged; we’ve seen extraordinarily high voter turnouts on both sides of the ocean.  It’s a great testimony to democracy-in-action in each of our countries.          

A major constant in U.S.-Korean relations has been the American Chamber of Commerce and the constructive role that its leadership and members have played in supporting the relationship.  In my career as Ambassador I’ve never seen a better example of Embassy-private sector partnership than AmCham Korea.  AmCham provides a valued platform and forum for discussion with ROK decision-makers as well as senior U.S. visitors, most recently Secretary of State Condoleezza Rice. 

Let me also recognize the significant contributions of other major trade organizations such as KITA, KCCI, and FKI, among the many outstanding Korean trade and business associations supporting U.S.-Korean commercial relations.  The teamwork here in Seoul couldn’t be better.
 
Let me turn to the issue of greatest interest to this audience, the KORUS FTA.   This time last year, the United States and Korea were approaching the deadline for our FTA negotiations, with many difficult issues still unresolved.  Each day brought with it newspaper articles about new negotiating impasses – on trade remedies, pharmaceuticals, autos, and agricultural products.  And yet despite that, I remained confident that we would successfully conclude the negotiations, because the benefits for both sides were just too big to walk away from.

Well, you all know how that ended.  We made extraordinary progress in resolving the outstanding issues and did in fact meet our April 1 negotiating deadline – with a full 20 minutes to spare.   We signed the agreement on June 30 – the largest FTA Korea has ever signed, and the biggest FTA the U.S. has signed in 15 years.  Once the dust settled, and the public had a chance to look at the fine print of the agreement – all 1400 pages of it – they realized that this FTA was just as big a deal as we said it would be.  For Korea, local think-tanks estimated the FTA will boost GDP growth by 6 percent over the coming decade, create 340,000 jobs, and increase foreign investment by $2-3 billion each year.  For the United States, our International Trade Commission spent several months reviewing the FTA and determined it would boost U.S. exports by about $10 billion, and boost U.S. GDP by $10-12 billion – significantly more than all our other recent FTAs combined.  And in addition to the substantial economic impact, another important benefit is that the FTA will broaden and modernize the bilateral partnership between the United States and Korea, adding a strong economic pillar to stand alongside our half-century-old defense alliance.

I’m pleased to see that by and large, the public response to the KORUS FTA has been positive.  Here in Korea, polls show that between 60 and 70 percent of the public believes the FTA will be good for Korea.  When Chief Negotiator Wendy Cutler was here two weeks ago, I accompanied her to calls on the Chairmen of the two main parties in the National Assembly, and they told her – in front of the TV cameras, and also after the TV cameras left the room – that they support the prompt ratification of the FTA. 

The situation in the United States is more complicated.  Overall, Americans don’t know as much about the KORUS FTA as Koreans do; Koreans have been studying the FTA, and debating it, for much longer.  The debate in the U.S. has thus far been dominated by opponents of the agreement and of free trade in general.  But I think we need to put that in perspective.  For virtually every FTA the U.S. has ever concluded – particularly those with important trading partners – the opponents of the agreement have been active and vocal early on.  They’ve tried to convince people that the agreement had no chance of getting ratified, and to discourage us from even submitting it for a vote.  Yet despite that vocal opposition, the United States has ratified every FTA we have ever signed.  All we need to approve an FTA is 50 percent of the votes plus one in both the House and Senate.

And so, when I look at the ratification situation in the U.S. Congress, I am confident that, while we face serious challenges ahead, including vocal opposition from some quarters, we can get this agreement approved by the House and the Senate.  President Bush has expressed strong support for the KORUS FTA; the President and U.S. Trade Representative Susan Schwab, along with Secretary Rice, Commerce Secretary Gutierrez and many others, are working with Congress, the business community, and groups and communities across the country to build support for ratification.  This will not be easy – things that matter rarely are.  But we see a good window of opportunity to build the necessary momentum to get the FTA debate going in Washington later this spring, and try to get Congress to ratify KORUS by mid-summer.  

One event that will help move that process along is next month’s visit of President Lee Myung-bak to Washington.  President Lee is an eloquent representative of modern Korea – a confident, dynamic Korea that sees a mature, multi-faceted relationship with the United States as one of the best ways to guarantee a safe and prosperous future for Korea.  President Lee’s visit will provide a great opportunity not just to introduce America to a new Korean President who wants to strengthen the U.S.-Korea alliance, but also to reacquaint Americans with South Korea, and remind them why our partnership is so important to America’s strategic interests.

Another important element in the process is the role of the U.S. business community.  Over 500 businesses and institutions have joined the U.S. Business Coalition for the KORUS FTA – by far the largest business coalition to support an FTA ever.  They know that, whether you are talking about agricultural products, manufactured goods or services, the KORUS FTA is going to lead to millions and millions of dollars of new business.  Once this debate gets going on Capitol Hill in earnest – and that hasn’t happened yet – we are going to see a huge outpouring of support from the U.S. business community, and that will help sway the vast majority of Congressmen and Senators who have not declared a position on the FTA yet.  And I want to commend AMCHAM – the organization, and all its member companies – for the strong support you have shown for the FTA up till now, and the support I know you will continue to show in the future.  There has been no more effective voice of advocacy for the KORUS FTA than AMCHAM.

Finally, another thing that will help move the FTA ratification process along in Washington is resolving the beef issue.  We’ve been debating this issue since before the FTA was signed; there is no scientific justification for keeping safe U.S. beef out of the Korean market any longer; and we simply won’t be able to build the necessary Congressional support for FTA ratification without resolving this issue.  I won’t dwell on the issue except to point out that the biggest losers from the current situation are working Koreans who pay the highest prices in the world for beef.  I’m hopeful that the government will do the right thing and reopen the beef market soon on the basis of international scientific standards, as the previous Administration promised to do. 

Once all these elements fall into place, we can build real momentum for FTA ratification.  And I am convinced that the more Americans study the FTA, the more they will recognize how important and beneficial it is for both our countries, and that when it comes time for a vote, the votes will be there.  I know there’s been a lot of talk about trade in the U.S. presidential campaign over the past few weeks.  But I think when the skeptics look carefully at KORUS, they’ll see that this is exactly the kind of trade deal they want America to sign – a comprehensive, high-standards agreement with an advanced economy that has strong labor and environmental protections.  Sometimes Korea’s strong labor and environmental laws can complicate your business, but in the context of the KORUS ratification process, they are a definite plus.

I’ve spoken a lot about the FTA, because I know that’s an area of great interest to AMCHAM members.  But I’d like to turn now to some other areas of the U.S. relationship with Korea, and what we foresee under the new administration of President Lee Myung-bak.  

First of all, we are very pleased with President Lee’s emphasis on strengthening U.S.-Korea relations as one of the central pillars of his foreign policy doctrine.  We look forward to working closely with the new government and continuing a close relationship built on 55 years as allies and major trading partners.   A key aspect will undoubtedly be Korea’s continued support in the global war against terrorism and on efforts to counter the proliferation of weapons of mass destruction. 

The defense alliance between our two countries has ensured peace on the peninsula since the Korean War.   Over those years, the alliance has evolved and adapted to changes in the strategic environment, with Korean and U.S. forces performing missions together beyond the Korean peninsula in places such as Afghanistan and Iraq.   We welcome President Lee’s call for strengthening the alliance not only in military terms, but also in meeting a broad range of new challenges, such as climate change and the search for renewable energy technologies.

A challenge that’s been with us for a long time has been North Korea and its pursuit of nuclear weapons.  We look forward to the closest possible cooperation with the new government to achieve the complete denuclearization of the Korean peninsula and North Korea’s abandonment of all its nuclear weapons and existing nuclear programs.

The past year has seen some encouraging developments, including the shutdown and disablement of the North’s nuclear facilities at Yongbyon.  Just two weeks ago, we all followed the events connected with the New York Philharmonic’s historic concert in Pyongyang.   It was an extraordinary event broadcast live across the entire peninsula.  It was an opportunity for North Koreans to see Americans as they really are rather than through the prism of propaganda, and perhaps to see the possibility of a different kind of relationship with the United States. 

But we shouldn’t have any illusions.  North Korea’s nuclear program still remains a fundamental problem.  North Korea has yet to present a complete and correct declaration of all its nuclear programs, as they were supposed to do by the end of last year.  As Assistant Secretary Hill has emphasized, it’s crucial in the Six-Party process for the North Koreans to fulfill their commitments.  When they’re ready to do so, we’ll be ready to deliver on our commitments to remove the North from the State Sponsors of Terrorism List and the Trading with the Enemy Act.  We want to move on to the next stage, the stage of full denuclearization, which will open the way to normal relations between North Korea and the rest of the world, and to economic assistance that can improve the lives of the North Korean people. 

Let me say a few words regarding the Visa Waiver Program.  I know that many of you are eagerly waiting for the day when Korean citizens can travel visa-free for short stays in the United States.  So are we.  Fortunately, Koreans are now one step closer to visa-free golf trips to Pebble Beach and shopping sprees in Manhattan, thanks to great progress made over the last several months on this issue.  Last year, new federal legislation opened the door for Korean membership in the VWP, and in January, the new Korean administration expressed its willingness to move ahead with a Memorandum of Understanding that will form the basis for Korean participation in the VWP.  We hope the MOU will be signed as early as next month and that a bilateral agreement on other key elements of the program will follow.  

Both the U.S. Department of Homeland Security and MOFAT on the Korean side have put forward ambitious plans that could bring the ROK into the Visa Waiver Program by the end of 2008.  But there is much hard work ahead:  DHS must develop systems to monitor visitors’ departures as well as develop an Electronic Travel Authorization system to pre-screen potential visitors.  Our Korean counterparts need to introduce their new e-passports and get them into the Korean public’s hands.  We are making great strides and I have high hopes for Korea’s successful entry into the VWP this year, generating more travel, commerce and exchanges for both countries.

While there will be much continuity in our work with the Lee Myung-bak Administration, the change of government here in Korea will also offer up some new opportunities to expand the cooperation between our two countries – particularly for businesses.  President Lee won a landslide victory in December based on a pro-business, pro-growth (and pro-Alliance) platform.  I know during the campaign some people wondered just how he planned to boost economic growth to 7 percent over the next five years.  Frankly, from a U.S. perspective, the Korean growth rate of 4-5 percent over the past few years has been pretty respectable.

Based on what’s been said and done since the election, we can now see that President Lee has an ambitious economic reform agenda, designed to tackle the structural impediments in the Korean economy and boost growth through deregulation, tax cuts, creating a more predictable regulatory environment, improving the labor climate, and – perhaps most notably for you – creating a fair and welcoming environment for foreign investment.  President Lee’s emphasis on the role foreign investment can play in boosting Korea’s competitiveness has been particularly welcome, and I hope that will dispel any of the remaining ambivalence we sometimes see about the role of foreign investment here in Korea. 

Obviously it’s only been two weeks since President Lee was inaugurated, and we know ambitious reforms will always trigger resistance.  So ultimately what will matter are the details that emerge, and the implementation in the months and years ahead.  But there is a promising opportunity here, and I encourage AMCHAM and its members to work with the new administration, and with the Embassy, to make the most of it.  The FTA, with its 24 chapters, its various appendices, and its hundreds of pages of tariff tables, was designed to remove the impediments to trade and investment between our countries.  But even once those barriers are removed, U.S. businesses – just like Korean businesses – will have an interest in seeing that Korea creates a business-friendly environment that makes Korea a promising destination for investment. 

I know that sometimes it has been hard to convince your headquarters to invest in Korea.  But we have an opportunity here to build on the FTA and work with the new government to help them build a truly world-class business climate here in Korea.  Even the skeptics will agree that it’s hard to imagine that an opportunity like this will come along again.

From this sketch of U.S.-Korea bilateral relations, there is no denying that we are living and working in interesting times.   In less than a month, the Korean National Assembly will be up for election.  Following that, President Lee Myung-bak will be in the United States meeting with President Bush and senior private and public-sector leaders across the United States.  In June, the OECD Ministerial on the future of the Internet economy will be held here in Korea.  In August, the Olympics will be held in Beijing, drawing the attention of major world leaders to North East Asia.  And in the fall, the American electorate will vote for a new U.S. President. 

A year from now we will enter another period of significant change – a dramatically new political and economic landscape.   I am confident that beef will be flowing by then (and back on the menu here at the Hyatt) and the KORUS FTA will be ratified.  Discussions regarding KORUS FTA will revolve around how to maximize its benefits and build on its achievements.   I am equally confident that in the midst of these dramatic changes, the foundations of the U.S.-Korean alliance will remain a constant, ensuring that the relations between Koreans and Americans grow stronger than ever in the years ahead.