Korea Again Postpones Vote on US FTA

16 November 2011

The South Korean Parliament has once more postponed the vote for ratifying its free trade agreement with the US. The delay is aimed at buying more time for negotiations between the ruling and opposition parties, in the hopes of resolving the current standoff over the pact.

On 10 November, parliamentary speaker Park Hee-Tae postponed the vote for the second week in a row. He moved the next plenary session to 24 November, three weeks after the original vote was scheduled to take place.

A vote scheduled for earlier this month was blocked when the Democratic Party (DP) joined the Democratic Labor Party in occupying the foreign affairs committee's hearing room, physically preventing the bill from going to the floor.

President Lee Myung Bak underlined the importance of the agreement for his government on Tuesday 15 November by making a personal plea to parliamentarians to pass the legislation. It was his first visit to Parliament to lobby in favour of a specific piece of legislation, and his third visit ever, since taking office in early 2008.

Recent opposition has centred on the agreement's chapter covering foreign investments. The agreement allows either party to bypass domestic courts and refer investor-state disputes (ISD) to an international arbitration panel.

Proponents argue that such a clause is standard practice, and has already been included in other Korean trade agreements; meanwhile, critics argue that such a provision could have negative implications for the country's legal independence.

Possibility of renegotiation offered

During Lee's visit to Parliament yesterday, he offered legislators the possibility of renegotiating this clause with the US, should the bill be ratified.

"If parliament approves ratification of the FTA bill and advises both the United States and South Korea to renegotiate on the ISD ... then renegotiation will be requested of the United States within three months of the bill taking effect," Lee told lawmakers, according to Reuters.

The move prompted DP lawmakers to meet earlier today to discuss Lee's proposal. Party secretary general Jeong Jang-seon called the offer a "step forward," despite being insufficient. Meanwhile, others insisted that the suggestion was "disappointing" and promised to hold their ground, the Korea Times reported.

The ruling party, the right-leaning Grand National Party (GNP), has a solid majority in Parliament and could attempt to push through the legislation. However, the GNP has avoided doing so in the face of strong minority opposition, with an eye to the upcoming elections.

Opposition parties have vowed to continue blocking the vote unless the FTA is renegotiated. According to the Wall Street Journal, the Korean Parliament lacks mechanisms for minority parties to use negotiating power, such as the US filibuster; this has reportedly lead to physical fights during voting on some occasions.

The tide seemed to have turned last week, when over half of the DP parliamentarians expressed interest in a compromise. They agreed to prevent physical blockage of the deal if the GNP would re-negotiate the dispute settlement provision after the bill had taken effect, according to Korean newspaper Yonhap News. The deal was not enough, however, to prevent another delay.

Opposition to the pact is not limited to the investor-state dispute settlement issue alone; critics have also cited concerns over the agreement's potential impacts on certain domestic industries, especially agriculture and small business.

Protests against the agreement have been held almost daily in Seoul; opposition leaders in Parliament have also called for a "ten plus two" plan to modify 10 clauses of the agreement and add two new measures to the agreement aimed at minimising the impact on domestic workers (see Bridges Weekly, 2 November 2011).

The pact was already partially re-negotiated in 2010 to resolve differences between the two countries over Korean access to the US automobile market and US access to the Korean beef and automobile markets (see Bridges Weekly, 9 December 2010).

The original agreement was negotiated and signed under former Korean President Roh Moo-hyun and his counterpart, then-US President George W. Bush, in 2007. The pact was ratified in the US Congress last month and signed into law shortly after by current US President Barack Obama, after years of political wrangling between Democrats and Republicans.

ICTSD reporting; "S.Korea President visits parliament to push trade pact," AFP, 15 November 2011; "SKorea's Lee pushing for US trade deal's approval," ASSOCIATED PRESS, 15 November 2011; "Opposition party discusses Lee's surprise proposal on US FTA," KOREA TIMES, 16 November 2011; "S. Korea president pushes for stalled U.S. trade pact," REUTERS, 15 November 2011; "South Korea Delays Vote on Free-Trade Pact," WALL STREET JOURNAL; 10 November 2011; "Rival parties call off parliamentary session amid standoff over FTA with U.S," YONHAP NEWS, 10 November 2011.

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