"Thank you. First, I would like to thank the Korean Government
and the management and staff of the Shilla Hotel for doing such a wonderful job
in hosting me and my delegation this week.
"I spent all of my time at the hotel this week, but if I had
to be stuck in one building for an entire week due to our busy schedule and the
weather, I can’t think of a place as nice and friendly at this hotel.
"We wrapped up the second round of the KORUS FTA negotiations
today. This was a busy week, with
the teams working around the clock.
"Overall, we made reasonable progress this week. We continued to develop a better
understanding of each other’s position and to bridge differences, and in trade
jargon, remove brackets in many of these areas.
"We agreed on the timeframes for tariff phase-outs for
industrial goods, which is a very significant step and we are nearing agreement
on the timeframes for tariff phase-outs for agricultural and textiles goods,
setting the stage for the exchange of tariff offers by mid-August.
"We also exchanged initial offers in services and investment,
and made progress in a number of other negotiating groups.
"FTA negotiations are complex, particularly when you are
talking about two large and sophisticated economies like the United States and
Korea. In any FTA, it is customary for the
early negotiating rounds to focus on the less complex issues, That is an
accurate characterization of our meetings this week.
"Each FTA also has its share of difficult and controversial
issues. The KORUS FTA is no
"On pharmaceuticals, I’m sure you’re aware that thing did not
go as planned. First, let me make
clear, the United States
position is not to challenge the basic premise of Korea’s national
healthcare system nor are we trying to block reform. That is not our objective. We recognize Korea faces an aging population and rising health
care costs – the United
States and other countries around the world
faces similar challenges. What we
are saying is any reform should be transparent and fair, and not
disproportionately target foreign pharmaceutical products.
"Going into these negotiations, we had agreed to establish a
dedicated working group to discuss pharmaceutical trade issues. To our surprise, upon our arrival in
Seoul, we were informed that Korea was going
to switch to a positive list system for the reimbursement of pharmaceutical
products before we had the opportunity to have meaningful negotiations on these
"In our view, the decision to proceed with this plan is
inconsistent with both the mandate of the Pharmaceutical Working Group and the
market-opening spirit of the FTA.
In short, Korea’s decision precluded meaningful
negotiations at this time.
Therefore, in order to ensure continued balance in the overall
negotiations, we felt that it was appropriate to suspend work in two additional
groups: trade remedies and services.
"We believe that this was a balanced and measured response
that appropriately reflected our level of concern.
"Clearly, our preference would have been for all the groups to
have met this week as scheduled.
But, under the circumstances, we were left with no choice.
"That said, while our differences in views in the
pharmaceutical sector are challenging and difficult, they are not
insurmountable. Ambassador Kim and
I have agreed to continue to work together to get things back on track with
respect to pharmaceuticals so as to allow for a productive third round during
the week of September 4th.
"For our part, the United States continues to believe
the FTA will generate significant commercial, economic, and strategic benefits
for both our countries.
"We remain as convinced as ever that the KORUS FTA is the
right path for the United
States and Korea, both now and for the coming