TWN Info Service on Free Trade Agreements

11 September 2006


Korean Lawmakers File Suit Against FTA with US

A group of 23 South Korean lawmakers has filed a lawsuit against the government claiming that the move to conclude a FTA with the U.S. is unconstitutional.

The lawmakers complained about the hasty manner in which talks are being conducted and the government’s attempt to unilaterally push ahead with FTA negotiations with the U.S. The lawsuit is filed to demand more transparent disclosure of information.

Meanwhile, the Federation of Korean Industries, Korea’s biggest business lobby group, has expressed concern over the US’ demand for stricter rules on chaebols or family-run conglomerates in the free trade agreement talks between the two countries.

The US claims that chaebol’s dominance in Korea blocks access by multinationals to the Korean market.

However, the Federation claims that Korean conglomerates are already under watchful eyes of anti-trust regulators through laws like equity investment cap, cross-shareholding rules and other chaebol restrictions and therefore, the U.S. demand is unacceptable and unfair.



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Item 1

Hankyoreh, Korea
Lawmakers launch lawsuit against South Korea-U.S. FTA talks
7 September 2006

(Yonhap News, Seoul.) A group of 23 South Korean lawmakers on Thursday filed a suit with South Korea’s Constitutional Court, claiming that President Roh Moo-hyun’s administration’s move to conclude a free trade agreement (FTA) with the U.S. is unconstitutional.

The 23 lawmakers, including nine from the ruling Uri Party, complained that the Roh government has infringed on the National Assembly’s constitutional right of approval in the conclusion of a foreign treaty by unilaterally pushing ahead with FTA negotiations with the U.S.

"The administration has monopolized FTA-related information and carried out negotiations in a hasty, unfaithful and unilateral manner," said Rep. Kim Tae-hong of the Uri Party in a news conference at the Assembly.

"We filed the constitutional lawsuit to demand transparent disclosure of information and more systematic negotiations," he said.

All of the minor opposition Democratic Labor Party’s nine lawmakers joined the lawsuit, while the main opposition Grand National Party did not participate.
The lawsuit came as South Korean and U.S. negotiators are holding the third round of FTA talks in Seattle

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Item 2

Korea Times

Big Businesses Rap US for Call on Chaebol Control
US Claims Chaebol’s Dominance Blocks Access by Multinationals to Korean Market During FTA Talks
By Park Hyong-ki, Staff Reporter
7 September 2006

The Federation of Korean Industries (FKI), Korea’s biggest business lobby group, has raised its voice against the United States’ demand for stricter rules on chaebols or family-run conglomerates in the free trade agreement talks between the two countries.

In a statement, FKI said yesterday that although the Korean business community greatly supports an FTA with the U.S., it cannot accept the U.S.’ request, as the proposal overlooks Korea’s market, business environment and international standards.

``Korean conglomerates are under watchful eyes of anti-trust regulators,’’ said an official at the FKI headquarters in Yoido, Seoul.

“Laws like equity investment cap, cross-shareholding rules and other chaebol restrictions have always been applied to big business groups, not to mid- and small-sized companies or even foreign invested companies in the country. Therefore, the U.S. demand is unacceptable and unfair.”

As far as this issue is concerned, large corporations are instead conversely discriminated against, the FKI added.

Big industrial groups have constantly argued against these rules as they cast a shadow over their investment plans and capital spending, calling for their abolishment.

The chaebol rules are part of the Fair Trade Commission’s efforts to enhance corporate transparency as well as to prohibit family-controlled companies’ anti-competitive practices and curb them from becoming too dominant in the market.
However, the governing Uri Party recently proposed a plan of easing anti-chaebol rules to the influential business circles, including FKI, the Korea Chamber of Commerce and Industry (KCCI) and the Korea International Trade Association (KITA) to boost investments and jobs amid a sluggish economy. The deal received little approval both on the political and business fronts.

The U.S.’ call for stiffer competition laws on conglomerates to be included in an FTA can not be discovered in any other bilateral or multilateral trade accords established among countries in the world, including Korea’s FTAs with other nations, the FKI official stressed.

``This U.S. claim is burdening only the Korean companies. The U.S. must withdraw this demand, which can roadblock both countries to successfully conclude a bilateral FTA.’’

The FKI’s response comes after chief U.S. negotiator Wendy Cutler said that the U.S. wants Korea to apply tougher rules on chaebols, adding that their dominance overshadows multinational companies operating in Korea.

Meanwhile, Korea’s chief negotiator Kim Jong-hoon responded by saying that the U.S. opinion on chaebols is wrong.