Identifier
Created
Classification
Origin
06SEOUL1963
2006-06-13 05:52:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Seoul
Cable title:  

KORUS FTA: SENIOR BLUE HOUSE OFFICIALS PLEDGE

Tags:  ETRD PGOV KS 
pdf how-to read a cable
VZCZCXYZ0000
PP RUEHWEB

DE RUEHUL #1963/01 1640552
ZNR UUUUU ZZH
P 130552Z JUN 06
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8405
INFO RUCPDOC/DEPT OF COMMERCE WASHDC 1496
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEHKO/AMEMBASSY TOKYO 0854
RUEHBJ/AMEMBASSY BEIJING 0782
RUEHGV/USMISSION GENEVA 1800
UNCLAS SEOUL 001963 

SIPDIS

SENSITIVE
SIPDIS

PASS USTR FOR BHATIA, CUTLER, AUGEROT AND KI
STATE FOR E, EB, EB/TPP AND EAP/K
COMMERCE FOR 4431/MAC/OPB/EAP/DUTTON
TREASURY FOR IA/ISA/DOHNER AND BUCKLEY
USDA ALSO FOR FAS/ITP/CLAUS AND GRUNENFELDER
NSC FOR SHIRZAD, HUNTER, CHA AND COLLINS
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ETRD PGOV KS
SUBJECT: KORUS FTA: SENIOR BLUE HOUSE OFFICIALS PLEDGE
SUPPORT FOR THE FTA

Ref: Seoul 1858

SUMMARY
-------

UNCLAS SEOUL 001963

SIPDIS

SENSITIVE
SIPDIS

PASS USTR FOR BHATIA, CUTLER, AUGEROT AND KI
STATE FOR E, EB, EB/TPP AND EAP/K
COMMERCE FOR 4431/MAC/OPB/EAP/DUTTON
TREASURY FOR IA/ISA/DOHNER AND BUCKLEY
USDA ALSO FOR FAS/ITP/CLAUS AND GRUNENFELDER
NSC FOR SHIRZAD, HUNTER, CHA AND COLLINS
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ETRD PGOV KS
SUBJECT: KORUS FTA: SENIOR BLUE HOUSE OFFICIALS PLEDGE
SUPPORT FOR THE FTA

Ref: Seoul 1858

SUMMARY
--------------


1. (SBU) A troika of key senior Blue House officials told
the Ambassador that they are paying very close attention to
the U.S.-Korea Free Trade Agreement (KORUS FTA). The Chief
Secretary to the President for National Policy outlined the

SIPDIS
Korean government's plans for internal coordination among
ministries and outreach to private business and the media.
The Ambassador stressed the need for continued positive
messaging, and emphasized our concerns over the negative
direction taken on pharmaceuticals pricing policy. End
Summary.


2. (SBU) The Ambassador met June 7-9 with Chief Secretary to
the President for National Policy Kwon O-kyu, Minister for
Policy Coordination Kim Young-ju, and Presidential Economic
Advisor Chung Moon-soo, to discuss progress under the
ongoing KORUS FTA negotiations.

CONCERNS OVER MESSAGING AND PHARMACEUTICALS
--------------


3. (SBU) In each of these meetings, as he did in his June 2
meeting with Deputy Prime Minister Han Duck-soo (reftel),
the Ambassador stressed the need for continued positive
messaging about the KORUS FTA. It is not useful for Korean
officials to portray the agreement as a "necessary evil"
imposed by the United States, the Ambassador explained.
Rather, officials should stick to more positive "win-win"
themes, especially given Korea's own role in persuading the
United States to negotiate an FTA. The Ambassador explained
that the U.S. negotiating team has been pleased with the
degree of preparation and quality of their Korean
counterparts.


4. (SBU) Concerning pharmaceuticals trade issues, the
Ambassador stressed the United States' displeasure at the

Ministry of Health and Welfare's sudden move to adopt a
"positive list" system for reimbursement under the national
health care plan. The prices of foreign drugs are not the
crux of Korea's healthcare financing problems, the
Ambassador noted, and it is unfair for innovative
pharmaceuticals prices to be singled out for containment.

Furthermore, the Ambassador stressed that we saw the sudden
policy shift -- despite previous assurances to the contrary
-- as a breach of faith that undermines U.S. confidence that
Korea will sincerely address pharmaceuticals issues in the
course of the FTA talks, which is the appropriate forum.

KOREAN GOVERNMENT INTERNALLY ALIGNED TO SUPPORT FTA
-------------- --------------


5. (SBU) Chief Secretary Kwon emphasized that President Roh
remains sincerely dedicated to the goal of negotiating and
ratifying the KORUS FTA, "without deviation." The KORUS FTA
is Korea's "most important single initiative to boost future
development," Kwon declared. The Chief Secretary downplayed
the importance of the May 31 election results on Roh
Administration policy. Even after that setback at the
polls, Kwon said, the Uri Party is still stronger than it
was at the start of the Roh Administration, and holds
sufficient policy and parliamentary levers to get things
done. Meanwhile, the opposition Grand National Party cannot
overplay its hand in obstructing President Roh, for fear of
alienating voters.


6. (SBU) Kwon admitted that domestic opposition to the KORUS
FTA is well organized; in his opinion, the national
coalition to fight the FTA is stronger than movements
opposed to nuclear power or the move of U.S. military bases
to Pyongtaek. The conjoining of real economic concerns with
general civic group activism and anti-American ideology is
proving to be a potent mix, Kwon noted, adding that anti-FTA

forces have the sympathy of the broadcast media and have
even organized provincial branch groups. In this context,
he said, the government and pro-FTA forces need to stay "on
message" and be careful to avoid missteps.


7. (SBU) Kwon then briefed the Ambassador on the Korean
government's internal organization to support the FTA.
There are four tasks, Kwon said:

-- First, the negotiations themselves must be successfully
completed. This effort will be led by "experts" at the
Ministry of Foreign Affairs and Trade (MOFAT).

-- Second, the government must coordinate closely with
private sector interests, particularly in the services
sector but also in other industries. The Ministry of
Finance and Economy (MOFE) is in charge of this endeavor.

-- Third, there is the matter of "handling the FTA
politically," which "is something bureaucrats are less
skilled at," Kwon said. This means meeting with opposition
groups and mollifying them and solving problems created by
their opposition. At the Cabinet level, this effort will
primarily involve the Blue House Senior Secretary for Civil
Affairs, as well as Minister for Policy Coordination Kim
Young-ju, who reports to the Prime Minister.

-- Finally, there is the matter of public relations.
Outreach efforts are to be managed and coordinated by the
Blue House Senior Secretary for Public Affairs, Kwon said.
The Blue House, for example, is planning public forums
involving both pro-FTA and anti-FTA representatives, Kwon
said, in order to draw out the anti-FTA forces and undermine
the legitimacy of their emotional arguments.


8. (SBU) All four teams, Chief Secretary Kwon said, are to
be managed by Kwon himself. To facilitate internal
communication, Kwon said that he will chair a weekly meeting
each Monday to review progress and reach decisions.


9. (SBU) Kwon said that he anticipates that the anti-FTA
forces will exert their maximum efforts in the late summer,
prior to the third round of negotiations. In anticipation
of that development, Kwon said that he is planning to
recommend that a special Presidential Committee chaired by
the Prime Minister be established in August to handle the
issues. Kwon said that he understood the Ambassador's
points on the need for positive public messaging, and
promised that the Blue House would continue to do its part.
Kwon recalled his positive relationships in previous
positions with USTR officials such as Nancy Adams, Sandy
Kristoff and Dorothy Dwoskin, and explained that he
understood the importance of a "win-win" spirit in
negotiations.

PHARMACEUTICALS: HEALTH MINISTRY "WAS CONVINCING"
-------------- --------------


10. (SBU) Regarding the pharmaceuticals issue, Kwon said
that although he usually favors the position of trade
officials over those of domestic regulators, "when the
Ministry of Health and Welfare (MHW) made a presentation
about their 'positive list' plan, their logic was very
compelling." That is why all the Korean economic Cabinet
ministers decided to go along with the change to a positive
list system, in consideration of the need to bring expanding
health care expenditures under control. Kwon noted that a
number of other advanced nations also use a positive list
approach.


11. (SBU) Still, Kwon said that he realizes that this issue
will need to be sorted out at the negotiating table. When
doing so, Kwon said, both sides need to use logic and refer
to global standards. In response, the Ambassador again
emphasized our concern that the playing field for drug
reimbursement and pricing is already not level, and that we

are seriously worried that the positive list plan will skew
things further.

PUBLIC OUTREACH EFFORTS ARE IMPORTANT
--------------


12. (SBU) Presidential Economic Advisor Chung told the
Ambassador that his office would be active in supporting the
Blue House's public outreach efforts on the KORUS FTA,
providing supportive research results and other arguments
for use in public events. Chung noted that, to date,
mainstream newspapers have been somewhat ambivalent about
the FTA, while "progressive" news outlets have been highly
critical. The Blue House will work hard to get out a more
balanced view. Chung mentioned an upcoming July forum to be
organized by the Korea Development Institute as one
important opportunity.


13. (SBU) Asked for advice as to how the Embassy should
approach public outreach, Chung said that we were on the
right track in using speeches, published editorials and
media interviews to get out our message. Chung cautioned
against direct U.S. Government interaction with anti-FTA
forces, for fear that such events might only make them
stronger.


14. (SBU) Chung noted that the issue of whether goods
produced in the Kaesong Industrial Complex (KIC) are
included in the KORUS FTA could be an important political
"hot potato," since it may be viewed as a litmus test of
U.S.-ROK relations and our handling of North Korea. The
Ambassador and EconMinCouns explained why Korea's proposal
on this matter will be very difficult for the United States
to accept, since it could prove to be a "poison pill" that
would jeopardize Congressional support for the KORUS FTA.

PRIME MINISTER'S OFFICE ALSO ENGAGED
--------------


15. (SBU) Minister for Policy Coordination Kim Young-ju
confirmed that the Prime Minister's role in the KORUS FTA
project is primarily that of an "enforcer" and
"cheerleader," who will work with opposing groups to try to
bring them around, and also participate in more general
public affairs efforts. Kim said that he believes the two
most difficult issues will be agriculture and Kaesong, and
noted that the Prime Minister's Office would be closely
engaged in the resolution of these issues. The Ambassador
noted that given the Prime Minister's background and prior
affiliation with civic groups, she will have a special
credibility on FTA issues.


16. (SBU) Concerning the pharmaceuticals issue, Minister Kim
said that he was aware of our concerns, and said that he
supported further discussion of the issue within the FTA
negotiations. Kim added that he was "sorry about the way
the issue transpired."


17. (SBU) The Ambassador related that the U.S. negotiating
team was appreciative of how well the Korean team had
prepared for the first round; as a result, talks were going
well. Minister Kim noted that the Korean government's
resolve to follow through with the KORUS FTA should be clear
from the "decisive action" it took on the screen quota to
get the talks started.


18. (SBU) Minister Kim asked about the possibility of an
extension of Trade Promotion Authority, and the Ambassador
responded that at this juncture the prospect appears
unlikely. Kim noted that faster progress under the Doha
Round would make the KORUS FTA agricultural talks easier;
absent that multilateral "cover," the FTA talks will be that
much harder, Kim said.

VERSHBOW