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Korea, Malaysia, UAE seen as likely candidates for free trade agreements, says USTR

WASHINGTON, DC - 01/25/06 - The Bush Administration hopes to initiate more free-trade agreement (FTA) negotiations in 2006, possibly with South Korea and Malaysia, according to US Trade Representative (USTR) Rob Portman.

The USTR briefed reporters in Washington before leaving for this week's World Economic Forum in Davos, Switzerland.  

Informal sessions at the Davos conference could give the economic ministers in attendance a chance to make incremental progress in long-stalled World Trade Organization (WTO) negotiations, said Portman.

"We'll be announcing some additional FTA partners soon," said the USTR. "As I think you will notice, they will not be with small economies because I do think we need to move on to some larger economies."

South Korea - the US' seventh largest trading partner - has worked on resolving a number of bilateral trade issues to lay the groundwork for FTA negotiations, he said, adding that a free trade agreement with South Korea would be the largest for the US since the North American Free Trade Agreement (NAFTA) with Canada and Mexico was implemented in 1994.

"I'm very encouraged by the talks and I'm very hopeful that we can deepen our economic relationship with Korea through an FTA," Portman said, "but we're not quite there yet."

He said he was scheduled to meet in Davos with the trade minister of Malaysia, another fast-growing Asian economy.

"I'm hopeful we can make an announcement on Malaysia before long as well," he said.

According to past public statements, the next FTA negotiation in the Middle East likely would be with the United Arab Emirates. Just a few days ago, in line with the White House's goal of developing a Middle East Free Trade Area, the US signed an FTA with Oman. 

Earlier, adding to the existing FTAs with Israel and Jordan, the Bush Administration implemented FTAs with Morocco and Bahrain.

Both political and economic issues present obstacles to an FTA with Egypt, the largest Arab country, he said. 

Without elaborating on the political issues, Portman said the US "continues to work with Egypt" on resolving issues such as market access and transparency. 

"They are beginning to reform and liberalize their economy," Portman said. "But we're not quite there yet in terms of the economic or commercial side."

At Davos, Portman said he plans to meet with the trade minister of Switzerland, a country eager for an FTA that has substantial trade with and investment in the US, but also has one of the most protected agricultural sectors in then world.

"I'm not as optimistic there because I'm not sure that the agriculture issues can be resolved," Portman said.

Reviewing ongoing FTA negotiations, he described conclusion of those with Panama as "very close." 

Intensive negotiations are continuing with Ecuador and Colombia, he said, rebutting published reports describing negotiations a week earlier with Thailand as going poorly.

"We've made great progress with Thailand last week despite the Thai press accounts about the protests and so on," Portman said. "We found them [the Thais] to be quite interested in making progress on the key issues that divided us."

Although 2006, a US election year, likely will have an abbreviated legislative schedule, he said he hoped Congress would take time to approve FTAs signed with Peru and Oman, as well as any WTO accession agreements that might be signed with Kazakhstan, Russia, Ukraine, and Vietnam.

The president's authority to negotiate trade agreements, called Trade Promotion Authority (TPA) or "fast track," which expires in mid-2007. 

Under TPA, Congress restricts itself to approve or reject a negotiated trade agreement, within strict time limits and without amendments.

Expiration of TPA is part of Portman's calculations on submitting bilateral agreements to Congress as well as on completing the WTO negotiations, formally known as the Doha Development Agenda.

"Now we're really up against a time crunch…[and] the reality that our trade promotion authority expires in 2007, said the USTR. "In order to avoid the significant risk of not having presidential authority to move a trade agreement without amendment, we need to move now."

Portman said WTO negotiators "need to establish modalities" - broad approaches such as tariff formulas - by April 30 and submit final proposed tariff schedules by July 31 for the WTO to complete negotiations and for the US to submit an agreement to Congress by the end of 2006.

"I think the most important thing to come ... out of Davos would be to reaffirm those dates and to make some incremental progress in the core negotiating areas" of market access for agriculture, industrial tariffs and services, he said.

The big obstacle remains agriculture, just as it has been since the Doha negotiations were launched in 2001. 

Portman criticized the European Union (EU) for refusing to budge from its latest offer, which he said would result in little or no real increase in market access.

"The EU has still not meaningfully embraced the commitment we all made in July 2004, which was for substantial improvements in market access," Portman said. "The European position had been that their proposal is a take it or leave it proposal ... and that's not the basis for an agreement."

Go back, or read the latest Front Page stories:

Korea, US Free Trade Pact ''Possible'' by Early 2007

WASHINGTON, DC – 10/25/06 – A free trade pact between the US and South Korea could become a reality by early 2007, says chief US negotiator Wendy Cutler at the opening of this week’s fourth round of talks between the two countries; since the two sides launched FTA negotiations in February they have reported little progress even though they postponed consideration of the most politically sensitive issues, such as US access to the Korean rice market.