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Viewing cable 06SEOUL2095, U.S. BUSINESS REPS AND AMBASSADOR MEET PRESIDENT

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Reference ID Created Released Classification Origin
06SEOUL2095 2006-06-25 22:42 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Seoul
VZCZCXYZ0000
OO RUEHWEB

DE RUEHUL #2095/01 1762242
ZNR UUUUU ZZH
O 252242Z JUN 06
FM AMEMBASSY SEOUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8621
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 0850
RUEHKO/AMEMBASSY TOKYO PRIORITY 0916
RUEHIN/AIT TAIPEI PRIORITY 1743
RUEHGV/USMISSION GENEVA PRIORITY 1809
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY 1511
RHEHNSC/NSC WASHINGTON DC PRIORITY
UNCLAS SEOUL 002095 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/K AND EB/TPP 
COMMERCE FOR 4431/MAC/OPB/EAP/DUTTON 
PASS USTR FOR CUTLER, AUGEROT AND KI 
NSC FOR CHA AND COLLINS 
 
E.O. 12958: N/A 
TAGS: ETRD PGOV KS
SUBJECT: U.S. BUSINESS REPS AND AMBASSADOR MEET PRESIDENT 
ROH 
 
 
SUMMARY 
------- 
 
1. (SBU) The Ambassador accompanied Citibank Chairman Bill 
Rhodes and other top representatives of the U.S.-Korea 
Business Council (USKBC) to their June 22 courtesy call on 
President Roh.  The meeting focused on the U.S.-Korea Free 
Trade Agreement (KORUS FTA) and lasted a little over an hour. 
 USKBC members took the opportunity to stress their support 
for the FTA as well as to outline some of their chief 
concerns with the Korean market.  President Roh strongly 
reiterated his support for the KORUS FTA and expressed 
confidence that it could be successfully negotiated within 
the envisioned timeframe without sacrificing substance.  Roh 
stressed the importance of the Kaesong Industrial Complex for 
South Korea's unification strategy and said that the two 
countries' political leadership should discuss the issue of 
Kaesong's place in the FTA in a pragmatic manner.  End 
summary. 
 
ROH'S WELCOMING COMMENTS 
------------------------ 
 
2. (SBU) In his welcoming remarks, Roh expressed confidence 
that there should be enough time to finish the KORUS FTA 
talks, noting that negotiations should be conducted 
expeditiously.  He commented that while content cannot be 
sacrificed to speed, and substance takes precedent over 
timing, it should be possible to satisfy both concerns.  He 
hoped that business could be mindful that some people in 
Korea are anxious about the FTA and said he suspected that 
Korean public opinion is more complex and convoluted than is 
the case in the United States.  At the same time, Roh 
emphasized his conviction that the USKBC's longstanding 
efforts to reduce market barriers and promote closer 
U.S.-Korea economic links have improved the well-being of 
Americans and Koreans alike. 
 
USKBC STATEMENTS 
---------------- 
 
3. (SBU) Rhodes opened the discussion by reaffirming the 
strong support of the U.S. business community not only for 
the FTA, but also for Korea's goal of becoming an 
international financial hub.  He added that he was helping 
lead efforts to persuade the U.S. Congress to put Korea on 
the Visa Waiver Program.  Rhodes flagged pharmaceuticals, 
autos, agriculture and the Kaesong Industrial Complex as 
being the toughest issues in the negotiations in his opinion. 
 
4. (SBU) Marjory Searing of Pfizer contributed a strong 
statement on the problems faced by the pharmaceutical sector. 
 She said that her industry has always supported FTAs and is 
hopeful that the KORUS FTA will create an improved 
environment for research-based industry.  If such an outcome 
could be achieved, it could lead to an "incredible" increase 
in investment in the life sciences sector in Korea and make 
Korea a center of medical innovation.  Searing said, however, 
that the May 3 proposal by the Ministry of Health and Welfare 
(MHW) -- the so-called "positive list" plan -- was going in 
the wrong direction.  She maintained the plan would not solve 
the problems MHW had identified, and would reduce patients' 
access to the newest medicines.  She urged that the FTA 
negotiations be used to get "back on track." 
 
5. (SBU) Wayne Chumley of DaimlerChrysler said the Korean 
automobile sector was one of the toughest markets for foreign 
carmakers.  He hoped the FTA would address concerns in four 
areas: tariffs, taxes, standards and perceptions. 
 
6. (SBU) Stanley Gale, CEO of Gale International, which leads 
the consortium that is designing and building New Songdo 
City, part of a new Free Economic Zone (FEZ) in Incheon, told 
President Roh that the project is going well and that 
eventually New Songdo City would outstrip Dubai, Shanghai and 
Singapore as an FEZ.  The FTA would add to Songdo's and 
Korea's attractiveness as a hub.  Hugh Stephens of Time 
Warner thanked Roh for his decision to lower the screen quota 
 
and said that the U.S. film industry is looking for 
opportunities to capitalize on the "Korean Wave" by 
partnering with the Korean film industry.  Steve van Andel of 
Alticor said reductions in barriers to trade in consumer 
goods would help Korean and U.S. companies. 
 
ROH'S RESPONSE 
-------------- 
 
7. (SBU) President Roh responded to the USKBC members' 
comments by noting that since the negotiations are ongoing, 
it would not be wise for him to express his own opinions on 
the various specific issues.  On broader themes, however, Roh 
said that Korea needs to pursue a market-opening policy. 
While opening does not guarantee success, he averred, no 
society had ever been successful in developing its science 
and civilization without opening, and that is why he supports 
the FTA with conviction.  He emphasized that public 
perceptions should not be based on fallacies, but rather on 
facts.  Roh made clear that the FTA should achieve a balance 
of interests between the two countries, but noted that such a 
balance could be achieved either through obtaining balanced 
outcomes within the specific negotiating areas or in the 
aggregate.  (Comment: Implying the potential for cross-sector 
trade-offs.) 
 
8. (SBU) Roh mentioned that many of the issues raised by the 
USKBC representatives were longstanding issues that had been 
discussed between the two countries for some time.  He 
admitted that with the benefit of hindsight it was clear that 
the decision to reduce the screen quota should have been made 
much earlier so that the link to the FTA would not be so 
apparent, but explained that it had simply taken a long time 
to bring along the recalcitrant stakeholders. 
 
9. (SBU) President Roh commented that the FTA needs to 
include "safety valves" in case it caused unpredictably high 
adjustment costs, but hastened to add that they would 
probably never have to be used.  Roh stressed that it was 
important for Korea to continue strong economic cooperation 
with, and focus on, the United States.  Whereas Korea used to 
emulate Japan, Roh said, it should shift to emulating the 
United States.  Roh commented that every time Korea had 
announced its intention to open a new sector or market, it 
had caused serious domestic social friction in advance of the 
opening, but in the end the opening had thus far always led 
to economic success.  He stressed that is why safeguards are 
necessary for the U.S. FTA, in order to provide psychological 
reassurance to anxious groups and thereby deal with such 
social friction. 
 
KAESONG INDUSTRIAL COMPLEX 
-------------------------- 
 
10. (SBU) Concerning Kaesong's relationship to the KORUS FTA, 
Roh said it would be up to the political leadership of both 
countries to discuss the matter in a pragmatic way.  He noted 
that there were differences between Korea and the United 
States in their approaches to North Korea, based on 
differences in strategic perspectives.  He emphasized that 
Kaesong is a way to induce change in North Korea, and is 
crucial for maintaining peace and stability on the Korean 
peninsula. 
 
11. (SBU) Roh stressed that he considered Kaesong to be the 
"linchpin" to achieving two goals: positive evolution in 
North Korea's internal policies and peace and stability on 
the peninsula.  Roh explained further that Kaesong was an 
important part of South Korea's unification strategy, which 
he said is based on working toward unification in three 
stages: first economic integration, then cultural change, and 
finally political unification. 
 
COMMENT 
------- 
 
12. (SBU) The tone and substance of the meeting was quite 
positive.  U.S. industry, especially the pharmaceutical 
 
 
sector, made the most of its opportunity to raise their 
concerns with the President.  Searing's intervention -- 
something that ROKG interlocutors had recommended to the 
Embassy that a pharmaceutical industry representative do at 
the meeting -- hit the right note.  It was also reassuring to 
hear that President Roh is not participating in the current 
Seoul political fad of calling for "going slow" on the 
negotiations.  Roh was not strident on the Kaesong issue, but 
it is clear from his comments that the issue has personal 
importance for him, which reinforces the delicacy with which 
this problem needs to be handled in the FTA talks. 
VERSHBOW