A little chill in the air?

It's not yet September, but it's already feeling icy in East Asia. Check out this article about the anti-Korean sentiment on display in Beijing during the Olympics. As the article points out, it is too soon to tell whether or how this will affect relations between the two countries. But, I think it is worth noting how far from cosy bedfellows China and Korea remain a mere 16 years since resuming diplomatic relations.

Major commentators, from old Sam Huntington to Robert Kaplan, routinely lump Korea in with China, citing their proximity and their shared Confucian heritage. Often, they caution the US against letting South Korea fall into China's clutches, or in fact assume that this has already happened. But the US has a far sturdier position in South Korea than they credit. The US is the best ally Koreans have ever seen, bar none. Not more than a vassal to China for many eons, and an exploited colony of Japan's for half the 20th century, Korea has not had a lot of positive relationships with foreign powers. Though not perfect, the US has been a pretty stead-fast partner for the past 50 years. And China doesn't seem overly anxious to cut in.

Koreans, for their part, have fifty negative prejudices toward the Chinese for every one they have toward Americans. The Chinese are dirty, greedy, disorganized, lazy, manufacturers of inferior products and producers of toxic, heavy-metal-laden yellow dust. Americans are merely imperialistic and occasionally boorish. In sum, whatever negative sentiment the Chinese harbor towards the Koreans is more than mutual.

But, like it or not, the relationship between the US and South Korea has been cooling of late as well. Certainly there is anti-American sentiment in Korea, and the US has been seeking for sometime to reduce our military commitment to the country. The pending FTA has, if anything, exacerbated this chill, by stirring up issues--like Korea's absurd position on US beef, on the one hand, and US arrogance, on the other--that might be better to have left dormant. I have mentioned that Koreans would be right to have doubts about this FTA, and there may be good reason to have doubts about all such bilateral trade agreements, but it seems to me that South Korea had better hang onto the US as an ally or else risk being left out in the geopolitical cold. Korea, for all its industry, is a very small country that needs some friends if it's going to thrive. There is a good chance that Korea is never going to find good allies in East Asia. In a sense, the depth of this history here prevents, rather than facilitates, effective partnerships. The US might continue to be the best friend Korea's going to be able to find for a long, long time.

Here's the beef

Last year, I wrote a few posts on the pending U.S.-Korea FTA. A consensus was eventually reached between the negotiators, and the agreement is currently waiting to be ratified by the respective legislatures.

If you go back and read my old posts, you will at least agree that the issues surrounding this agreement are complicated. It seems to me, for instance, that the U.S. should ratify the agreement simply for geopolitical reasons: South Korea is a close ally in a crucial region that has been drifting out of the fold of late. An FTA, if done properly, would more closely wed Korean and U.S. interests, and would enhance Korea's opinion of the U.S. Moreover, economists on both sides have argued for the economic benefits. Automobiles, for instance, seems to be roughly win-win: an FTA would open up the higher-end Korean market to U.S. manufacturers, so that they can compete better with Mercedes and BMW, while opening up the smaller car market in the U.S. to Korean companies, so that they can compete better with Toyota. On the other hand, Korean drug companies worried about increased competition and regulation in the Korean drug market, and Korean food companies and consumer groups worried about the lack of regulation governing U.S. food manufacturers. These are just a few of the contentious issues the negotiators had to work through in no fewer than seven drafts, each hundreds of pages long.

Nevertheless, the FTA has boiled down to one issue: beef. As I've mentioned before, after the mad cow scare in 2002, Korea banned all import of U.S. beef. Korea had been the third or fourth largest importer, but since the ban public opinion in Korea has hardened against U.S. beef as more and more news programs and journalists document the absurd practices that dominate the U.S. cattle industry--see, for example, "The Meatrix," which was featured in one Korean documentary.

But, Sen. Sam Brownback and others in Congress have stated explicitly that they will not support the FTA unless the Koreans completely lift the ban. And so, here we see the effects of democracy in America today: take an incredibly complicated issue, and cut it down to a sound bite that fits on the evening news.

The interesting thing is that the Koreans have taken up beef as the key issue as well. There have been a series of massive, daily protests against allowing U.S. beef back into Korea. Carrying candles--a clear sign that they are different from the petrol-bombing anti-dictatorship protesters of the previous generation--and stalling traffic around the main government buildings, the demonstrators have forced the government to halt the resumption of imports a few times over. Originally started by middle and high school students who organized on the Internet, the demonstrations have become a powerful political force here.

Here are some pictures from the Boston Globe to help you get an idea of the scope of it. (Thanks for the tip, Frazer.)

The latest on the beef dispute is that South Korea has decided not to allow imports of US beef that is from cows that are older than 30 months. This was a concession to the demonstrators in Seoul. Why 30 months? According to NPR, which has a helpful Q & A, "Mad cow has rarely been detected in animals younger than 21 months, so many countries feel mad cow disease will not be a problem in animals younger than that. The United States' safety standards regard animals younger than 30 months as safe for consumption, since the number of cases in animals up to 30 months in age is still extremely small."

The U.S., for it's part, has said that it is not willing to place a quarantine on been aged over 30 months, and that the U.S. beef companies should voluntarily comply with South Korea's wishes. This has lead to a stalemate, and the governments are "in talks."

So, keep an eye on this issue. I will update when I can.



UPDATE: The NY Times ran an article saying that the U.S. has crafted an agreement with beef exporters not to ship beef from 30-months or older cattle to S. Korea. Basically this is just the U.S. companies voluntarily agreeing to abide by S. Korean demands. It is not clear whether this will pacify the Korean negotiators, or protesters. We shall see. The Times also notes that Sen. Max Baucus (D-MT) has stated that he will support the FTA if, and only if, the Korean ban on U.S. beef is lifted.

FTA Update: Why Democrats (and everyone) should support the Korea-U.S. Free Trade Agreement

The Bush Administration finally (and barely--25 minutes before the deadline) signed a Free Trade Agreement with South Korea on April 2. This was a major breakthrough--I had though that the negotiations might completely fall apart--and an important one for U.S. foreign policy in East Asia. Coupled with the recent thaw in relations with North Korea and the recently announced reduction of U.S. military forces in the South (and the handing over of the large Youngsan base in central Seoul), the FTA could cement our fraying relationship with a crucial ally in the region. A full deal with North Korea, including normalizing diplomatic relations (possible, if far fetched), could ensure a peaceful and friendly Korean peninsula for decades to come.

The Agreement must now be approved by each country's legislature. There has been mass demonstrations against the FTA in Korea, especially by unions and farmers, but it is still likely to pass in the Korean National Assembly. The deal is great for Korea's chaebol, or conglomerate corporations--like Hyundai and Samsung--who are still very powerful politically. Moreover, although Korea's president, who signed the Agreement, is wildly unpopular at the moment, he represents a coalition of left leaning parties. The conservatives are not going to stymie an FTA just to harm the already-lame president.

At home, there have been some Democratic Congress members who have come out in opposition to the FTA. It would be a nasty blow to Bush and his cronies to lose this one after such difficult negotiations. But to Koreans in favor of the FTA (a majority probably is, and certainly a majority of business leaders and politicians), a Congressional rejection would be a huge slap in the face. The (admittedly wishful) scenario above would be out the window. If the FTA is not ratified, we can expect to see increasingly tense relations and a migration towards China. It would be worse than foolish for the Democrats to forfeit an important ally just to annoy Bush--there are plenty of other ways to annoy him. But Democratic constituencies are also worried about specific aspects of the deal. I will here argue that the deal is on the whole favorable to U.S. interests, even leaving aside foreign policy. I don't know all the specifics of the deal; my comments will be based on initial reports released when the deal was signed.

Agriculture
The most vocal opposition groups, in the U.S. as well as in Korea, have been farmers. I previously argued that Korean farmers and their supporters had a point--the quality of U.S. agriculture has decreased markedly in the past 50 years, and given that cuisine is culture, Koreans relinquish their small, unique farms at their peril. Partly to allay those fears, the Koreans demanded that rice be left out of the FTA. That is, U.S. rice will still be heavily taxed, and Koreans will still pay 400 percent the world market price for rice. (The Korean rice industry is subsidised and inefficient, but food is important, and in Korea rice is especially so. Let them do what they want...) American rice farmers are predictably upset. But in exchange, U.S. beef will be allowed back into Korea, with the current 40 percent tariff eventually eliminated, pending a World Organization for Animal Health ruling in May. Koreans have not imported U.S. beef since a mad cow scare three years ago. Democrats are not happy with this situation. Sen. Max Baucus (D. Montana), the chairman of the Senate Finance Committee, said, "I will oppose the Korea Free Trade Agreement, and in fact I will not allow it to move through the Senate, unless and until Korea completely lifts its ban on U.S. beef." The ban on U.S. beef has been more political than heath-related, but finally getting rid of it will be a boon to beef farmers. Probably the Koreans were keeping the ban just to use it as a bargaining chip, and probably the World Organization for Animal Health (abbreviated OIE...it's French) will clear U.S. beef. But it is worth noting that the whole FTA may sink if the OIE does not rule in our favor.

Automobiles
Taxes will decrease over time on both Korean and American automakers. This should be great for Hyundai and Kia as they fight Toyota for a foothold in the U.S. (Hyundai and Kia together have 4.5% of the U.S. auto market.) It will be less great for GM and Ford in Korea, since Koreans notoriously avoid foreign cars. Still, foreign cars are beginning to be seen as status symbols, so GM, who owns the Korean car company Daewoo and already has a foot hold here, might be able to gain some market share. On the other hand, both Hyundai and Kia are building factories in the U.S., so their cars would not have to face import duties anyway. And the American companies are going to have to shift more and more of their production abroad to stay alive. So, ultimately, despite the noise the UAW will make, I think autos should be a non-issue.

Textiles
Duties on textiles have been largely eliminated. U.S. companies like Nike and Levis (and also McDonald's and Starbucks) are already well-established in Korea. But, since most of their product is manufactured abroad, the FTA will have little impact on their profitability. Korean companies might try to break into the U.S. market, and compete with GAP for instance, but this is not going to bother too many people. But smaller U.S. companies, like American Apparel, which does manufacture its clothes in the U.S. and already has stores in Korea, could stand to benefit a lot. When the U.S. pursues trade agreements, and gripes about its trade deficit, we should think more about these small and mid-sized companies that actually produce product in the U.S. If we can help them out here and there, we might be able to chip away at the deficit in a healthy way--without lobbing insults and restrictions at China.

Entertainment
As it stands, Koreans limit the amount of time cable channels and theaters can devote to foreign content. The FTA would relax the limit (from 75 to 80 percent foreign content), allowing more U.S. films and TV shows to be aired. Many Koreans are already big fans of "Grey's Anatomy" and "Prison Break", and U.S. movies regularly top the box office charts (300 was the highest grossing movie for three weeks in March) . This agreement can only help Hollywood. Hollywood has certainly done its part to help Democrats; the least they could do is return the favor. But, if you'll allow me to return to geopolitics for a moment, there is a potentially more important consequence as well. The IHT recently ran a series titled "Vox Populi" about English as the global language. (This comes as no surprise to me: I am, after all, making good money teaching English to kids without knowing their native language and without knowing anything about teaching.) Leaving aside nineteenth-century British imperialism, I think English has become prominent because of three things that the U.S. is doing particularly well. 1) Brand building: Like Nike, Levis, McDonald's and Starbucks (and of course Microsoft), U.S. brands--even when they are completely multi-national and no longer rely on U.S. production--permeate the entire globe, bringing English with them. 2) Higher education: U.S. universities now lead the world in scholarship in almost every field, forcing academics and students to study in English. 3) Entertainment: And Hollywood is everywhere. Whenever people all over the world go to the theater, they are hearing English. These trends, I think, are absolutely crucial to securing our power in the coming century. Whatever we can do to promote Hollywood abroad should be done.

So that's the situation. I still think Koreans should be a bit sceptical about this FTA, but Americans should be over the moon. Although the beef issue is sticky, I think that the overall benefits--to small manufacturers, the entertainment industry, and the general political situation--vastly outweigh the drawbacks to the farming and auto industries. I hope Congressional Democrats will agree.

FTA?

Dear Reader,

Here is a little thing I wrote about the then-pending Free Trade Agreement negotiations between the U.S. and South Korea. I originally posted it, on February 18, on my friend Shannon Powell's American Democracy Project site, which can be accessed through Facebook. It is now outdated--a deal has been signed, it now awaits only Congressional approval. Please read this, and then read my next post:





I had been in favor of the Korean/U.S. FTA--from both the Korean and American perspectives--until I read this excellent article by Michael Pollan in the NY Times Magazine. The article, "Unhappy Meals", does not mention Korea or international trade at all, but Pollan's arguments about healthy eating changed the way I thought about the FTA debate.

First, some background. Korea and the U.S. are on their seventh round of negotiations. They are hoping to finalize by March of this year because the Bush administration's ability to negotiate a trade agreement without Congressional input expires in July. This "fast track" authority forces Congress to simply vote yea or nae on the finalized FTA; it is not allowed to tinker with it or attach its own provisions. This obviously speeds up the process considerably. If the FTA misses the July deadline, it will be a long time before its details can be worked out. In the meantime, Bush is trying to renew this fast track authority.

As the NYT notes: "The talks stalled over United States requests for greater access for American cars, rice and drugs, and over South Korea's demand that Washington change antidumping rules applied to South Korean steel, cars, computer chips and textiles." (Choe Sang-Hun, January 16, 2007). Antidumping rules are much-criticized duties placed on goods imported to the U.S. that are considered to be unfairly priced--either sold below-cost or below-market because they were subsidized at home. Many potential and current trade partners consider antidumping rules to be hypocritical protectionism--this is a big issue, but one I will avoid for the moment. Look here for some good info.

While the FTA is a huge issue in Korea, it is often overlooked in the U.S. (It has only been mentioned 5 times in the NYT in the past year.) This is a mistake, I think, not so much because the U.S. has a lot to gain economically but because it has a lot to lose politically. South Korea has long been an important ally in East Asia, but lately it has been distancing itself. An FTA would help to shore up a fraying relationship. Moreover, after the failure of the Doha round of WTO talks, the U.S. is looking particularly protectionist and, frankly, petty on trade issues. (This from a Republican administration!) Failed negotiations with Seoul would send another bad message to the world.

And until lately, I thought that an FTA would benefit Korea as well. There would be an immediate GDP increase, and most likely an increase in foreign direct investment. After 30 years of fast climbing, Korea's growth seems to have stalled leaving it just ahead of Canada (11th in the world) in terms of GDP, and only $24,000 per capita. If Korea wants to officially break into the upper eschelon, it needs exports, exports, exports. To this end, (and because a comprehensive world trade policy has not been established) Korea has been pursuing FTAs with many different countries and trading blocs. Korea has finalized bilateral trade agreements with Chile, Singapore, and the European Free Trade Association (Switzerland, Norway, Iceland and Lichtenstein), and is exporting similar agreements with China, the EU, and Mercosur, along with the U.S. Any FTA will buy Korea's major exports--cars, steel, cell phones, ships--more market space, but one with the U.S. will be especially profitable, since the U.S. consumer appetite is so large and since Korea already has established brands in the U.S. that would suddenly be able to compete better (e.g. Samsung, Hyundai, Kia).

So what's the downside? Some people worry about GM or Ford gobbling up market share in Korea, but this seems highly unlikely. For one thing, the gains made by Hyndaie and Kia in the U.S. are likely to vastly outweigh potential losses to American brands at home. And Koreans are notorious for buying only Korean products. (See dip in import consumption around 1996-98 crisis.) GM has already managed to gain access to the Korean market, by buying Daewoo motors out of bankruptcy, but this just caused Koreans to be skeptical of Daewoo. And, I seriously doubt Ford's capability to capitalize on any opportunity presented to them. Toyota cars manufatured in the States would be left out of the agreement.

The big U.S. imports that would benefit are foods and drugs. Korean farmers--most of whom own small plots of land scattered between mountains and high-rise apartment buildings, personally selling their product at small markets in Seoul and other cities--would be seriously pinched by cheap U.S. imports of rice and beef and vegetables. Korean consumers, on the other hand, would get access to a wider variety of produce and processed food for cheaper prices. Bananas used to be only for rich people--until Dole and Del Monte started importing them from the Philippines. Now you can get a dozen for about a dollar fifty. Something similar would happen to foods like beef and asparagus that are now largely unavailable or very expensive.

So, a fair trade off, right? I mean, Korea gains GDP but loses its farms to the free market--and consumers benefit across the board and on both sides of the Pacific. Well, Korean farmers don't think so--they hold protests in Seoul almost weekly. But all Koreans would be affected. They would be eating differently. By losing their farms, they'd be losing their food--they would start to eat just like the U.S. They would lose, in a very concrete sense, their culture. This is what people mean when they talk about globalization's leveling effects and cultural meddling.

Is that so bad? Well, here's where Michael Pollan comes in. His argument, in "Unhappy Meals" is that the quality and complexity of American food has been subtly decreasing since the 1950s leading to unforeseen consequences in the population's health. Farms and food companies started finding cheaper and easier ways to make food that tasted good--from artificial flavoring to chemical fertilizers. While making food cheaper, it has been disastrous for quality. Pollan says "Since the widespread adoption of synthetic nitrogen fertilizers in the 1950s, the nutritional quality of produce in America has, according to U.S.D.A. figures, declined significantly."

The idea of nutrition has developed in tandem with the science of food production, convincing us to focus on the elements of the food we eat rather than the whole. We started eating protein instead of grilled steak or poached fish, eating carbs instead of bread or pasta. This allowed manufacturers to break foods down to their simplest components, simplifying the production process--and our diets. Simpler food is cheaper food, but if all we need is protein it should still be healthy food. Pollan argues that, given our declining heath, there must be something crutial, overlooked by nutritionists, left out of our diets. Our bodies have not learned how to cope with these changes and deficiencies.

My Korean acquaintance explained that when you are making kimchi (the Korean national dish, a sort of spicy sourkraut) or any other Korean food, the ingredients matter. Kimchi made with Chinese cabbage is just not the same as that made with Korean cabbage. You can taste the soil in the food, she said. If anything is different, the dish wont come off. Koreans have been cooking with food grown in Korean soil for thousands of years--they know what they are dealing with.

Pollan corroborates what, at first, sounded nationalistic or merely superstitious: "When the soil is sick or in some way deficient, so will be the grasses that grow in that soil and the cattle that eat the grasses and the people who drink the milk."

An influx of food from the U.S., if it threatens the current small-farm system, will change everything about Korean cuisine--not just the types of food used but the soil it is grown in, the flavor as well as the chemical, "nutritional" content. To be fair, Korea's small farms might be overrun even if there is no FTA. But let's stick to the subject: Should Koreans support the FTA?

Pollan advises, among other things, that we try to eat more like people from countries whose cuisines have been unchanged (mostly) for hundreds or thousands of years--for example, France, Japan, Greece, and Korea. By extension, these countries should try their hardest to avoid eating more like us.

Pollan notes "We think of culture as a set of beliefs and practices to help mediate our relationship to other people, but of course culture (at least before the rise of science) has also played a critical role in helping mediate people's relationship to nature. Eating being a big part of that relationship, cultures have had a great deal to say about what and how and why and when and how much we should eat." An FTA with the U.S. will fundamentally change what Koreans eat, will fundamentally alter their culture. And if our increasing levels of heart disease and diabetes are a product of our changed food supply, an FTA could be seriously detrimental to Koreans' health. Forget about GDP, Korea should avoid opening their market to American food products at all costs, even if this means abandoning the FTA. Koreans should not support an FTA with the U.S., and should even consider, perhaps, adding tariffs.

The U.S., for its part, needs to figure out ways to conduct diplomacy with its pen. We should sign an FTA even if it means allowing Korea to maintain protections on food products. But good luck slipping an Agreement of this sort past the farm lobby in Congress.