Ambassador’s Circle Dinner(30 min)

Jacksonville, FL, November 15, 2007

ROK-US Relations: An Alliance for the Future

Thank you, Admiral Howe.

Chairman Morales, Ambassador McAfee, and distinguished guests,

It is truly a pleasure to visit the dynamic and welcoming city of Jacksonville. Seeing the St. John’s River and Jacksonville’s many bridges reminds me of Korea’s own “River City” of Seoul.[1]

I am grateful for the hospitality of the World Affairs Council and the Jacksonville Port Authority– as well as for the generous support of all our distinguished sponsors this evening. By any measure, this event stands out as a sparkling and memorable occasion!

This evening, I would like to discuss the special relationship shared by Korea and the United States. And then I will highlight some of the changes we are undertaking to transform our vital alliance for the future – including the historic Korea-US Free Trade Agreement.

(Characteristics of the ROK-US Alliance)

This year marks 125 years of Korea-US relations, which officially date back to the Treaty of Peace, Amity, Commerce and Navigation of 1882. However, despite hopeful language assuring our mutual (quote) “lasting, and sincere friendship” -- our relationship did not immediately get off the ground.

It was not until more than half a century later, with the outbreak of the Korean War, that Korea-US relations finally took off. When communist troops streamed south across the 38^th parallel, the United States decided to draw the line. Together we endured a deadly 3-year struggle. In the aftermath, Korea and the United States entered into the Mutual Defense Treaty that created our modern alliance.

Today, our partnership is widely considered one of the most successful alliances in history. And this is no exaggeration!

If you look at our relationship over the course of the past five decades, I think you can identify several significant “constants”, or strengths, that have contributed to its success.

The first is that our leaders and our people have always seemed to share a certain faith that we can overcome even the most daunting of odds.

· In the fall of 1950, for example, it took an almost mythical confidence to look out from the Pusan perimeter and imagine that our country could be saved. But with perseverance, guts and faith -- we managed to turn the tide toward freedom.

· In the decades of poverty that followed, it took a huge leap of optimism to believe that a nation so thoroughly destroyed could ever prosper. But with faith and America’s sustained support, Korea has developed into a global leader in high technology, the world’s 11^th largest economy.

· Likewise, as Korea embarked on our experiment in democratic government, it was hard to predict that we would succeed. Again with faith and encouragement from the United States, democracy has taken root and blossomed. In fact, with our newfound success, we are now in a position to give something back to the world, as evidenced by the example that a Korean citizen, Ban Ki-moon, recently took the helm of the United Nations as Secretary General.

Which brings me to the second key quality, namely that our relationship is dynamic; from its origins, it has been distinguished more by action, than by words.

· The first and most critical example dates back to June of 1950, with the United States’ decision to act in Korea’s defense.

· In turn, when the United States went to Vietnam, Korean troops joined their US counterparts in force. Likewise in the first Gulf War, and in Afghanistan and Iraq as well, Korea is one of only a few countries in the world to send troops in every case.

We did not simply echo the US call that communism must be halted or terrorism stopped – when principle was on the line, we backed our support with concrete action.

· Closer to home, when Hurricane Katrina ravaged the Gulf Coast two years ago, our government was quick to extend our deepest sympathy. Korea then followed with some 30 million dollars for hurricane relief – the 4th largest contribution to that effort.

(Transforming the ROK-US Partnership)

Clearly, at half a century and going strong -- we have much to celebrate in our Korea-US partnership. Still, we are not resting on our success. Instead, we are working across-the-board to upgrade our ties to address the challenges and opportunities ahead.

On the political front, for example, we have evolved from simply a security alliance to a strategic partnership, where our Foreign and Defense ministers sit down on a regular basis to discuss bilateral, regional and global issues of concern.

In the security realm, we have successfully addressed such key issues as strategic flexibility, wartime operational control, and the relocation and realignment of US Forces in Korea.

Given the United States’ new strategic paradigm in the wake of 9-11, coupled with Korea’s improving military capabilities, these are fitting adjustments that we are ready to make.

In the economic realm, we are working hard to implement an historic Korea-US Free Trade Agreement, and I’d like to expand on that in a moment.

(North Korea)

Still, the most pressing item our two countries face remains the North Korean nuclear issue.

This problem must be addressed – and a military solution would be far too costly. A second Korean War would undo all the progress we’ve worked so hard to achieve. Instead, we are working closely with the United States and other key parties in the region to employ every available means to resolve this issue diplomatically.

After several years of ups and downs, we are pleased by the recent progress in the Six Party Talks in Beijing. Our broad and unified approach has finally convinced the North to shut down its nuclear facilities – on their way to disablement by the end of this year. We still have a way to go -- but we are now heading in the right direction.

Likewise, inter-Korean relations are expanding in concert with the denuclearization process, as we witnessed an historic inter-Korean Summit early last month – only the second summit ever since our country’s national division.

In their meetings, both leaders clearly expressed their commitment to peace and denuclearization on the Korean peninsula. And together they came up with a rather extensive blueprint to advance inter-Korean economic cooperation and common prosperity.

I want to make it clear that, throughout all these developments -- in the Six Party process, the summit discussions, and any other major international policy decisions -- the Korea-US alliance remains the backbone of Korea’s foreign policy.

(Rationale for KORUS FTA)

Not all the transformational change in our relationship is security-related. So turning to the economic realm, as I mentioned, we are embarking on a landmark Korea-US Free Trade Agreement.

Korea currently ranks as the United States’ 7^th largest trading partner, ahead of France, Brazil and India. Last year, trade between our two countries reached nearly 80 billion dollars.

Even as our bilateral trade volume continues to swell, investment is also becoming a two-way street.

Here in the Southeast, for example, Korean investments such as state-of-the-art automobile manufacturing plants in Alabama (Hyundai) and Georgia (Kia), and a computer chip manufacturing plant in Texas (Samsung), have generated thousands of new jobs, and numerous benefits and opportunities for the American people.

Here in Florida, Korean firms both large and small have invested 96 million dollars in the local economy, providing jobs and business opportunities for Florida citizens.

Continuing this trend, last month, the city of Jacksonville, JAXPORT, and Korean shipping giant Hanjin signed a Memorandum of Understanding to move forward on plans to establish a 450 million dollar container terminal here in Jacksonville.

Ventures like these symbolize the transformation in Korea-US economic ties -- and of our relationship as a whole. Therefore, as our nations’ economies have become more compatible and intertwined, on June 30^th, we signed a comprehensive bilateral Free Trade Agreement.

(FTA’s Basic Features)

If I may sum up some basic features of the KORUS FTA, as it is called:

First, it is big. With the combined value of our two economies exceeding 13 trillion dollars, this FTA will create the third-largest free trade area in the world – after the EU and NAFTA.

The KORUS FTA is also comprehensive – it covers the full range of trade-related areas from agriculture, to goods and services, to IPR, competition, labor and the environment.

Finally, this is a high-quality FTA, as tariffs on nearly 95 percent of all goods will be eliminated within three years. Clearly, this FTA will level the playing field for US exporters an move our trade relationship to a full partnership.

(KORUS FTA: Features of Important Sectors)

Let me be more specific by looking at a few key sectors:

(Agriculture)

Agriculture is the most beneficial area of opportunity for the United States, as Korea is the 6^th largest importer of US farm products, which have been averaging some 3 billion dollars annually.

Under the FTA, key Florida agricultural goods such as Florida orange juice, vegetables and tropical products will clearly benefit from expanded access to the Korean market.

(Non-Agricultural Goods)

Turning to non-agricultural goods – 11 percent of all manufacturing workers in Florida depend on exports for their jobs.

Therefore it is significant that the KORUS FTA will eliminate 100 percent of tariffs on industrial, forestry and maritime products, with nearly 95 percent of these goods becoming duty-free within 3 years of the Agreement entering into force.

This includes key Florida exports to Korea like computers and electronic products, machinery manufactures, transportation parts and equipment, chemicals, medical and scientific equipment and – one of Jacksonville’s leading exports - wood products. Under the FTA, these and other products will become much more competitive and affordable in the Korean market.

Recognizing that non-tariff barriers can also be an impediment to trade, the FTA includes an extensive set of provisions to eliminate such obstacles across the range of sectors.

Again, this facet of the agreement works in Florida’s favor, as more than 28 thousand companies exported from Florida locations in 2005 – and of these, 95 percent were small and medium-sized enterprises. These so-called “SMEs” generated nearly 61 percent of Florida's total merchandise exports -- the highest figure among the 50 states, far above the US average of 29 percent.

So the point is, tariff-elimination provisions are particularly important to small and medium sized businesses, which may not have the resources to navigate customs and regulatory red tape.

(Services and Investment)

Turning to services and investment, Korea is America’s 2^nd largest market for services in Asia. This Agreement will expand US access to financial, professional, telecommunications, audiovisual and other services. Consequently, the US service industry has been in unison in its strong support for the KORUS FTA.

Under the FTA, Florida’s thriving financial services industry will surely be the one of the biggest winners. The Agreement will allow US companies to establish branches of US banks, and asset managers to supply a complete range of financial services in Korea.

Investment will also be strongly protected under the agreement, putting US investors on an equal footing with Korean investors. Further, investor protections will be backed by a transparent and binding investor-state dispute settlement mechanism.

(IPR Protection)

On another aspect of the FTA, the Korean government has been actively promoting the protection of intellectual property rights in recent years by ensuring that its laws and policies are both up to date and fully in line with global IPR trends and standards.

The KORUS FTA provides a comprehensive set of strengthened and innovative protection measures for trademarks, copyrighted works and patents carefully crafted to meet the needs of the new digital economy.

(Autos)

Finally, despite what a few critics contend, another industry that stands to gain immensely is the US automobile sector.

First, this FTA will eliminate Korea’s 8 percent and the United States’ 2.5 percent tariff on passenger cars. Korea will also eliminate immediately its 10 percent tariff on pick-up trucks. However, we have agreed to provide special treatment for US pick-up trucks, by allowing the 25 percent US tariff on trucks a 10 year phase-out period.

Second, US automakers will be given a grace period until their sales reach a certain level to comply with Korean environmental and safety standards.

Third, the Korean government has even agreed to change its taxation system. Given the small size of Korea and the fact that we import all our oil, the current system is designed to have cars with larger engines pay more tax. However, Korea has agreed to simplify the taxation system to allay US concerns. Special consumption tax on autos will also be streamlined to a single rate of 5 percent.

Fourth, an expedited dispute settlement mechanism will be introduced, along with an unprecedented snap-back mechanism. If Korea is found to violate the auto agreement, the United States will be able to reinstate the tariff on Korean cars.

Given these concessions, the US International Trade Commission confirmed in its recent study that the removal of tariffs on US autos will have a positive effect on US exports.

The ITC also expects much of the import increase in passenger cars to be diverted from other import sources (55 to 57 percent). For this reason, impact on US employment for the broader passenger vehicles and parts sector would likely be negligible.

(Overall Benefits for the US and Korea)

Overall, for the United States, the KORUS FTA is the most commercially significant FTA in more than a decade. The US government estimates that the economy will see a 10 to 12 billion dollar benefit once the FTA is in place.

Further, historically, the US has always ranked as Korea’s number one trading partner. However, a few years ago, this status began to slip -- and now China, Japan and the EU export more goods to Korea. The KORUS FTA could help reverse that trend.

Moreover, Korea is pursuing FTAs with other key regions and countries. The US Chamber of Commerce aptly points out the cost of inaction: (quote) “US businesses and farmers would not only lose new access to the Korean market but also could lose market share as Korea concludes other bilateral trade agreements with global competitors.”

Beyond Korea, this FTA will also provide US businesses with a strategic springboard to strengthen their position among the other dynamic economies of Northeast Asia. It is worth noting that, with one-quarter of the world's population, the region accounts for one-fifth of the world's economy -- and that share is projected to grow to one-third over the next two decades.

Meanwhile, for Korea, this agreement is important because about 70 percent of Korea’s GDP comes from trade. With the FTA, Korea is expected to become more competitive in the most important market in the world. Furthermore, this FTA is a hallmark of Korea’s sustained effort to reform and open its economy.

(Benefits Far Outweigh the Costs)

No trade agreement can satisfy every last constituent, but I would make the case that for the KORUS FTA, the benefits far outweigh any costs.

Because Korean and US trade patterns appear to be more complementary than competitive, the risk of imports from Korea having a negative impact on US industry should be minimal. In fact, according to the US International Trade Commission, in contrast to the projected surge in US exports to Korea, Korean exports to the US are projected to have a negligible impact even on import-sensitive sectors such as textiles and passenger vehicles.

For Korea and the US, once the FTA is implemented, both economies will see new jobs created and new wealth acquired.

In addition, one of the big winners in the FTA will be consumers in both countries, who will benefit from greater choices and cheaper prices -- a point that sometimes gets lost in the arcane policy debate.

Finally, the strategic importance the Free Trade Agreement cannot be overstated. This FTA will further strengthen the Korea-US alliance, which is vital to maintaining peace and stability in Northeast Asia. By way of illustration, I would like to note that 10 Democratic members of the House of Representatives recently sent a letter to their leadership stressing the geopolitical importance of the KORUS FTA.

Still congressional approval is an uphill battle. In September, the Korean Government submitted FTA legislation to our National Assembly. We are hopeful that the US Congress will consider the FTA in the near future so businesses and consumers can reap the benefits of this win-win proposition as soon as possible.

(Conclusion)

In sum, looking ahead, I believe the rationale for the Korea-US alliance will remain strong for many years to come. For Korea, we need the alliance to ensure security and stability among the great powers of the Northeast Asia region.

For its part, the United States needs Korea as a trusted ally, and a strategic foothold on the Asian continent. In addition, Korea’s success represents a shining example of US foreign policy, and can serve as a model to others in the world.

As we have experienced in the first half-century of relations, I am convinced that the faith and optimism our people share, along with the durability and dynamism of our relationship, will see us through any future challenge we may face.

I’d like to close by saying, once again, that it’s a pleasure to be in Jacksonville. And from what I have seen and the people I have met, I think we can all look forward to a new era of cooperation between the Florida peninsula and the Korean peninsula!

Thank you very much. ###

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[1] Jacksonville’s nickname is “River City”.