S. Korea's rival parties compromise on controversial clause in trade deal with U.S.

S. Korea's rival parties compromise on controversial clause in trade deal with U.S.

South Korea's rival parties have reached a tentative compromise over a controversial clause in the free trade agreement with the United States, possibly clearing a hurdle for the agreement on the way to legislative approval, local media reported Monday.

Opposition parties have demanded the Investor-State Dispute Settlement (ISD) clause, which allows U.S. investors to settle disputes with the South Korean government at international courts, be removed before the South Korean parliament votes on the long- pending trade deal.

The opposition camp said the clause will allow U.S. investors to sue the South Korean government over issues even including its public policies, and that the court decision will favor Washington.

Following discussions Sunday, the floor leaders of the ruling Grand National Party and the main opposition Democratic Party agreed that Seoul and Washington start negotiations over the clause within three months after the pact takes effect, according to local broadcaster MBC.

The ruling party also agreed to draw up measures to protect vulnerable domestic industries, giving in to calls by the opposition camp.

While the Grand Nationals seek to pass the bill through the parliamentary trade committee as soon as possible, it remains to be seen whether the Democrats would agree to the tentative compromise between the floor leaders, according to media reports.

In response to the growing controversy over the ISD clause, the trade ministry issued a statement Monday, saying "some media outlets and civic groups claim that the Investor-State Dispute Settlement clause in the free trade agreement with the U.S. would incapacitate South Korea's public policy. This is not true."

The trade pact does ensure South Korea's sovereignty in its public policy decisions, the ministry added.

Seoul's two-way free trade agreement with Washington has been one of the most polarizing political issues here since it was signed in 2007, with opposition parties vowing to block what they see as a lopsided agreement in favor of Washington.

Resistance against the trade pact grew last year, after Seoul and Washington supplemented it to fix the imbalance in auto trade, a move designed to soothe U.S. auto industry skepticism.

The revised agreement allows the U.S. to keep its 2.5 percent tariff on South Korean cars for four years after the deal takes effect, while South Korea is to immediately halve its eight percent tariff on U.S. cars.

It also allows 25,000 cars per U.S. automaker -- almost four times the number permitted under the original pact -- to be sold to South Korea as long as they meet U.S. federal safety standards, addressing U.S. industry concerns Seoul's stricter safety regulations have virtually operated as a nontariff barrier.

The newly negotiated deal gained U.S. Congressional approval earlier this month, which coincided with South Korean President Lee Myung-bak's state visit there.

Policy think tanks here say the bilateral trade deal will create 350,000 new jobs and increase South Korea's gross domestic product by 5.66 percent, but critics dispute the estimate.

Meanwhile, South Korean trade minister Kim Jong-hoon and his U. S. counterpart Ron Kirk agreed to establish a working group on small- and medium-sized enterprises to help them benefit from the trade agreement after it takes effect.

The two sides also agreed to set up a committee on service and investment to help oversee the implementation of the trade pact in the services and investment areas, according to the foreign ministry.

Editor: Fang Yang

English.news.cn   2011-10-31 16:12:41 FeedbackPrintRSS
SEOUL, Oct. 31 (Xinhua)