SCENESETTER FOR HAGEL CODEL TO KOREA

C O N F I D E N T I A L SECTION 01 OF 04 SEOUL 003390

SIPDIS

CODEL
SIPDIS

E.O. 12958: DECL: 12/10/2014
TAGS: EAGR ETRD KN KS MARR PGOV PREL
SUBJECT: SCENESETTER FOR HAGEL CODEL TO KOREA

Classified By: CDA William A. Stanton. Reasons 1.4 (b,d).

SUMMARY
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1. (SBU) Despite a successful summit last month with
President Bush, President Roh continues to face criticism in
the press and even within his own party. Roh still has 15
months in office, but it is widely believed he is already a
"lame duck". Nonetheless, he must still address a number of
key issues at the forefront of bilateral relations with both
the U.S. and North Korea. Roh's legacy will rest on his
ability over the coming months to successfully transfer
wartime operational control to the Korean military (OPCON),
conclude the U.S.-Korea Free Trade Agreement (FTA),renew
talks with North Korea, and reinvigorate the 6-Party process.
END SUMMARY.

PRESIDENT ROH
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2. (SBU) Roh hoped that a successful summit on September 14
with President Bush would go a long way in increasing
domestic support for his leadership and his policies. The
Korean press, however, decided there was a definite lack of
substance in the summit and therefore all of the major
newspaper reported the meeting from a negative angle. Even
on the day of his 60th birthday, a significant milestone in
Korean culture, there was little to no fanfare in the media
or on the streets.

NORTH KOREA
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3. (C) During the Summit, President Bush and President Roh
agreed that a diplomatic solution still offered the best path
forward, and that U.S.-ROK discussions of a common and broad
approach toward the DPRK should continue. Even as we work
with the ROK and our other allies to implement UNSCR 1695, we
are engaging with the South Koreans on a diplomatic strategy
toward the North. There is genuine risk that President Roh,
in an effort to secure his legacy during the final year of
his presidency, might go it alone if he concluded that the
U.S. had given up on a diplomatic solution to the North
Korean nuclear issue. This could seriously damage our
Alliance, not to mention our efforts to denuclearize the
North. Finally, President Bush and President Roh were united
in warning the DPRK against a nuclear test. It is our hope
that the DPRK understands that such a provocative action
would result in a fundamental change in regional dynamics and
inter-Korean relations.

OPCON
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4. (SBU) The decision to transfer OPCON to the ROK and the
deadline for doing so continue to generate widespread
opposition. President Roh has been unsuccessful in
countering strong opposition from policy elites, retired
military officers, and the public at-large. Many fear that
transfer of OPCON effectively means U.S. "abandonment" of the
ROK. Many MND, MOU and MOFAT officials, and members of the
Defense Committee at the National Assembly who distrust the
Roh Administration, have also voiced concerns over potential
instability on the Peninsula, and possible damage to the
Alliance following the OPCON transfer.


5. (SBU) In addition, some critics question the ROK's
ability to assume wartime OPCON. Others doubt the National
Assembly will approve the sizable increases in defense
spending that the transfer will require. We have stressed
our assessment that the ROK is ready for OPCON and have
reiterated the U.S. Government's strong, long-term commitment
to the ROK. Many nonetheless seek clarification of our offer
to provide "bridging capabilities." Timing appears to be the
most problematic aspect of the issue, because of the politics
of the upcoming ROK presidential election in December 2007,
as well as worries that now is not the time given DPRK
missile launches and a possible nuclear test. DOD wants the
transfer to take place in2009, while the ROK is pressing for

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2012.


6. (C) In recent weeks Korean opposition to the OPCON
transfer has included:
-- All the former South Korean defense ministers.
-- 70 of 100 retired four-star generals in the ROK.
-- 160 former diplomats, including 3 foreign ministers.
-- The "Hope 21" group of moderate Uri Party lawmakers.
-- The opposition Grand National Party of Korea.
-- The Chair of the National Assembly's Defense Committee.
-- 10 military academy alumni organizations.
-- The Korean Veterans Association.
We continue to hope that at the October Security Consultative
Meeting in Washington a roadmap for the transfer of wartime
OPCON transfer will be concluded. In last week's Security
Policy Initiative talks at the Pentagon, little progress was
made toward a bilateral agreement on OPCON.

JikDo Range
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7. (SBU) Kunsan Mayor Moon Dong-shin announced on September
25 that his city had approved the ROKG request to use land
and sea territory under their jurisdiction, clearing the way
for U.S. forces' use of the Jikdo air to surface training
range. The Ministry of National Defense stated that it would
immediately begin construction to install a scoring system by
the end of this year. USFK requested installation of the
scoring system in 2005. So the Kemper Decision removed this
irritating issue from the agenda. The scoring system will
allow U.S. pilots to meet their training requirements. Once
the installation is complete, usage of the scoring system by
the respective Air Forces of ROK and USFK will be 70 (ROK) to
30 (USFK),versus 80:20 in the past.

FREE TRADE AGREEMENT
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8. (SBU) Our biggest economic priority by far is our
Korea-U.S. Free Trade Agreement (KORUS) negotiations. FTA
negotiations were announced in February and launched in June;
you will be arriving two weeks before our fourth negotiating
round, on the Korean island of Jeju. Korea is already our
seventh largest trading partner, and we are Korea's second
largest, after China. But most economists agree there would
be significant gains for both countries from an FTA:
boosting exports in both directions; increasing each
country's global competitiveness (especially as Korea ponders
how to cope with the rise of Chinese competition); and
enhancing consumer welfare, particularly in Korea where high
tariffs make the cost of living exceedingly high (one recent
survey named Seoul the second most expensive city in the
world, after Oslo).


9. (SBU) These complex negotiations will not be easy. For
the United States, this is the biggest FTA negotiation since
NAFTA, and this is by far the biggest FTA Korea has ever
negotiated. The toughest issues will likely be:
agriculture, where Korea currently imposes average tariffs of
52 percent; pharmaceuticals, where we want to ensure the
Korean health system offers fair pricing and reimbursement
for patented pharmaceuticals from the United States; and
automotive barriers, which have limited U.S. sales in the
Korean market to only 4000 cars a year (compared to Korean
automakers' sales of 800,000 cars annually in the United
States). The Koreans have their own negotiating priorities
that will be difficult for us: amendments to U.S.
anti-dumping laws; more temporary entry visas for Korean
professionals to work in the United States; and duty-free
entry in to the U.S. for products made in the South
Korean-run Kaesong Industrial Complex, just over the border
in North Korea.


10. (SBU) As is customary in FTA negotiations, here in Korea
the opponents of trade - those whose vested interests will be
affected, as well as those who oppose globalization or the
United States in particular -- have been much more active
than the potential beneficiaries, with the result that public
support for and opposition to the FTA are running
neck-and-neck. The Korean Government recently began an

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outreach campaign to promote the FTA, but public opinion will
be hard to turn around. One persistent theme in Korea is
that the expiration of Trade Promotion Authority (TPA) in the
United States next year imposes an unreasonable time
constraint on the negotiations. In response, we have
emphasized that there is ample time to negotiate a mutually
acceptable agreement before TPA expires on June 30, 2007 (and
the Koreans came to this negotiation better prepared than all
our other FTA partners),but that given the public concerns
about trade and globalization in the United States, it seems
overly optimistic to count on Congress extending TPA again.
The last time TPA lapsed, it took eight years -- and a change
of Administration -- for Congress to renew it. You may be
asked about Congressional sentiment toward trade, both with
respect to the renewal of TPA and the ratification of any
Korea-U.S. FTA that we conclude in the coming months.

Resuming Beef Shipments
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11. (SBU) The Koreans have technically re-opened their
market to U.S. beef, but they have defined SRMs (Specified
Risk Materials) so broadly that virtually any finding of bone
fragments in beef shipments will lead to a re-closing of the
market, making U.S. producers reluctant to resume shipments.
We continue to urge the Korean Government to employ a more
reasonable definition of SRMs so that U.S. beef shipments
become commercially viable and can resume in earnest. Given
Nebraska's fame as a beef production center, your ROKG
interlocutors will be interested in gauging your level of
concern on the beef issue. As a tactical matter, we have
generally found that explicitly linking the beef issue to our
FTA negotiations has backfired. Public opinion here will not
support re-opening the beef market if Koreans believe it was
the result of political pressure. Instead, we have stressed
that this decision should be made on the basis of sound
science, consistent with global practice and international
guidelines.

VISA WAIVER
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12. (SBU) Presidents Bush and Roh renewed their pledge to
bring Korea into the Visa Waiver Program (VWP) when they met
in September 2006. The ROK continues to make progress toward
joining the VWP - the program whereby citizens of 27
countries are able to travel to the U.S. for business or
pleasure without first obtaining a visa - but will not likely
join in the immediate future. DHS and State are in the final
stages of approving a 'roadmap' of specific steps leading to
Korea's inclusion in the program. Embassy Seoul officials
meet frequently with Korean counterparts to discuss the
current visa refusal rate (presently about 3.5%) which must
drop below 3% before the ROK can qualify for the VWP. In
addition, the ROK must work closely with the U.S. on
travel-related security issues and must have an e-passport in
production, which the ROK projects it will have by October

2007.

BUSAN APP
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13. (SBU) Consistent to the Secretary's call for American
Presence Posts (APP) in regions outside capital in countries
of high value to transformational diplomacy and American
interests, Embassy Seoul has proposed to establish an APP in
Busan. An APP in Busan would firmly re-establish an official
American presence in a burgeoning metropolitan region that is
second only to Seoul in demographic, political, and economic
significance.


14. (SBU) The United States has traditionally maintained a
diplomatic presence in Busan, until our Consulate was closed
in 1998 for budgetary reasons. Our American Center there had
closed two years earlier after sustaining damage during a
violent political demonstration. The ROKG as well as Busan
city officials have consistently requested that we
re-establish a permanent presence in Busan. In fact, since
the closure of our facilities, U.S. political, economic,
trade, and public diplomacy interests in the Busan region

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have only grown stronger. Busan hosted the 2005 APEC Leaders
Meetings, and Embassy officers, including the Ambassador,
have visited the region with growing frequency. In response
to the concomitant rise in local interest in the United
States, in 2004 we established an American Corner within the
Busan Municipal Public Library. The same year, we
established a seven-person permanent Container Security
Initiative team in Busan. Although these measures have been
helpful, Embassy believes that an APP will better equip us to
promote our growing interests in Busan. We note that China,
Russia, and others have permanent consulates there.


15. (SBU) The Department has approved the concept for an APP
in Busan to be initiated this calendar year, subject to
Congressional approval and the Department funding for the
initial start-up costs, to include staff salaries, and the
leasing of commercial office spaces in downtown Busan.

YOUR MEETINGS IN SEOUL
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16. (SBU) In scheduled meetings with President Roh, Foreign
Minister Ban, Defense Minister Yoon and Trade Minister Kim,
the ROKG will be looking for your assessment of the U.S.-ROK
relationship and will try to assure you that the ROK is fully
committed to the Alliance, the FTA, and to working with the
United States to bring North Korea back to the Six Party
Talks.
STANTON