December 03,2006

Baucus Speaks On Tomorrow’s Us-Korea Trade Negotiations

Ambassador Schwab, Korean Ambassador Lee join Baucus in Gallatin Gateway, MT

Washington, D.C. – U.S. Senator Max Baucus (D-Mont.), Ranking Democrat on theSenate Finance Committee, will speak this morning at the Chamber of Commerce inGallatin Gateway, MT regarding trade relations between the U.S. and Korea. The twonations will commence a fifth round of negotiations on a bilateral free trade agreement onMonday in Big Sky, Montana. Also attending the brunch were United States TradeRepresentative Susan Schwab and Korean Ambassador Lee Tae-Sik, both of whom arealso in Montana this weekend. 

The text of the Senator’s remarks follows here.

"Piloting U.S.-Korea Trade Talks to Success"
Remarks by Senator Max Baucus

What a terrific way to launch the Big Sky Round of U.S.-Korea Free Trade Agreement talks.

Welcome to Susan Schwab, our fearless and talented United States Trade Representative.

Welcome to Ambassador Lee, Korea's dynamic emissary to the United States. Welcome toWendy Cutler and Ambassador Kim, who as chief negotiators for the United States and Korea,are the real stars of this week's show.

I would also like to thank the Big Sky Round host committee, who volunteered to plan andorganize this negotiating round. In particular, I would like to thank Marne Hayes and AnneBorer, both of whom have dedicated their energy and countless hours of their time to plan thisevent and those throughout the week.

I take enormous pleasure in welcoming so many friends to Montana this morning. Our Koreanfriends have flown over six thousand miles to be here. Ambassador Susan Schwab and hernegotiating team have flown a few thousand themselves. Many of my Montana friends are hereas well, some of whom have driven hundreds of miles.

I believe that a group this diverse comes together for a reason. I don’t just mean the U.S.-KoreaFree Trade Agreement many of you will negotiate this week. To me, this is a gathering decadesin the making.

Many of you may know that ties between Montana and Korea have endured for over a century.

When many Koreans were forced from their homeland in the early 1900s, many found stability,prosperity, and a home in Montana. In the 1920s and 1930s, when Koreans tried to throw off theshackles of occupation, Koreans in Montana organized to help the effort. It is even reported thatSouth Korea's first president, Syngman Rhee, visited Montana’s Korean population to gathersupport. Thirty years later, when America joined 13 other nations to counter North Koreanaggression, nearly 20,000 Montanans volunteered. 5,000 served in the combat zone and 350 losttheir lives.

These decades formed a strong bond between Koreans and Montanans. A bond that was cast inadversity, when misfortune pursued us. But it is also a bond that endures today, when we seekbetter fortunes together.

I’m confident that this bond will help us meet challenges and seize opportunities. Those thatcome this week. Those that come in years ahead. In fact, when you face a challenge – when youwant to get something done –Montanans and Koreans have a pretty good track record.

A couple of years back, Montana ranchers were exporting a lot of beef and live cattle to Asia.

We could hardly keep up with demand. So some ranchers – thinking big like Montanans do –decided the buyers should fly a 747 into Great Falls, load it up with live cattle, and fly them toAsia.

Well, the Japanese came. They looked at the runway, pictured the world’s largest plane filledwith two hundred of Montana cattle, and turned us down. The load would be too heavy. Therunway too short.

But then the Korean buyers came. They looked at the same runway. They pictured the same twohundred cattle in the same kind of plane. But they decided we could do it. Together, Koreans andMontanans, made the impossible – possible.

I can think of no better analogy for the free trade agreement we have before us today. Then asnow, the payload is heavy – a free trade agreement between two world economic heavyweights.

With just a few months left on this administration’s fast-track authority to negotiate tradeagreements, the runway is also short. With growing unease over trade, we could even say theweather is stormy.

We all know what needs to be done for this agreement to lift off. And we know we have a veryshort time left to address key challenges.

First and foremost, this agreement must be accompanied by full and complete access to all U.S.beef and beef products consistent with international standards. That means bone-in and bonelessbeef from cattle regardless of age. We made some progress in September on boneless beef under30 months, but even that agreement failed to ensure smooth resumption of trade. I was verydisappointed to learn that just prior to these negotiations, Korea has rejected two shipments ofU.S. beef. This sends a bad signal about Korea’s willingness to follow sound science and addressthis issue in a meaningful way. We must secure an agreement based on internationally acceptedstandards. Simply put, anything less is a deal-breaker.

Second, this agreement must secure an end to tariff and non-tariff barriers for U.S. automobileexports. This, too, is a deal breaker. Korean cars are already commonplace in the U.S. automarket. More than 700,000 Korean cars were imported by the United States last year. Americancars, on the other hand, are kept out of the Korean market by a web of protectionist policies. Aweb so effective, that the United States exported just under 4,000 cars to Korea last year.

American auto companies can compete in any market. But they need a level playing field.

Third, pharmaceutical market access remains a major obstacle. Korean government pricing andreimbursement policies are notoriously opaque. I was disappointed to learn that instead ofmaking progress, Korea took a major step backward this year, announcing a major pricing policyshift, without consultation or advanced notice. This sends a very bad signal at a very critical timein the negotiations.

Fourth, Korea is positioning itself to be a major services and e-commerce hub in Northeast Asia.A Free Trade Agreement with the United States will go a long way in helping Korea achieve thisgoal. That is why it is ever so critical for Korea to lift remaining restrictions – even if they arenot currently enforced – in key services sectors like insurance, banking, express delivery, gaming,and telecommunications.

These are just a few of the daunting challenges that our negotiators face. Yet we should not bediscouraged. After all, when I first called for U.S.-Korea free trade agreement negotiations sevenyears ago, I did not do so because it was easy. In fact, I called for it because it was hard.

Some of the most difficult things in life have the biggest payoffs. This challenge is no different.

I know that, negotiated successfully, a U.S.-Korea free trade agreement will pay enormousdividends. This is true for the United States, for Korea, and for my home state of Montana.

For Montana’s farmers and ranchers, this agreement has great potential. For Montana's beefexporters, a free trade agreement can eliminate Korea's non-science based import restrictions andreduce Korea's 8 to 40 percent tariffs -- thereby opening a market valued at more than $800million. For Montana's barley and malt barley exporters, an agreement can free trade fromKorea's restrictive quotas and high out-of-quota tariffs. For Montana's wheat exporters, a freetrade agreement will solidify access to an already important market and will give our wheatproducers a critical leg up over Australian and Canadian competitors.

Agriculture is not the only sector of Montana's economy that stands to benefit from a tradeagreement with Korea. Some of Montana's most important exports to Korea are in the chemicaland minerals sectors, which currently face average tariffs of 6.9 and 5.8 percent respectively.

Reduction of these and other barriers to manufacturing and services trade will help Montana'sdynamic small manufacturing and services exporters – like Billing's Liquid Engineering andBozeman's RightNow Technologies – that are already making inroads in Asia.

The obstacles to this agreement are very real, and so are the many benefits. But in my mind Ihave the picture of the Korean 747 flying out of Great Falls a few years ago. An achievementthat took ambition, imagination, and a good bit of courage.

But the reason I am most confident that this agreement – like that plane – can take flight, is that Iknow who is in the cockpit and in the control tower. Ambassador Schwab, Wendy Cutler, andtheir team are some of the finest, most dedicated public servants I’ve known. With them pilotingthis agreement and charting its course, I am confident we will see “lift off” and success.

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