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Viewing cable 06SEOUL1963, KORUS FTA: SENIOR BLUE HOUSE OFFICIALS PLEDGE

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Reference ID Created Released Classification Origin
06SEOUL1963 2006-06-13 05:52 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Seoul
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 
------- 
 
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