[Outlook]Mending fences

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[Outlook]Mending fences

Over the years, U.S.-Korea relations have become strained and the alliance less sturdy. The current state of affairs is contrary to Korea’s interests and needs to be rectified. In order to improve the bilateral relationship, the new Lee Myung-bak administration should focus on the following issues.
First, it must make strengthening the U.S.-Korea alliance a priority. A critical factor in forging a strong alliance with the United States is trust. Unfortunately, the waning bond between the two nations is largely attributable to a lack of trust, which has been most visible in Korea’s dealings with the U.S. on the North Korea nuclear issue. To the United States, North Korea’s nuclear program is one of the most significant threats facing it and the rest of the world. Korea, however, has continued to conduct business as usual with North Korea and, at times, has even appeared to side with the North against the United States, raising serious questions about Korea’s overall commitment to the U.S.-Korea alliance. The level of mistrust generated by Korea’s approach to this issue has been significant enough to have a negative effect despite Korea’s other significant contributions to the global war on terror, including its commitment of troops in Iraq.
In order to restore lost trust, Korea should make it unmistakably clear that it shares the same fundamental goals as the United States when it comes to waging the war on terror and curbing the proliferation of weapons of mass destruction. Second, Korea must confirm that it stands shoulder to shoulder with the United States and will support it on these issues, including the North Korea nuclear issue. Finally, Korea must become a better team player by not surprising or blindsiding the United States. Korea should consult as the United States in advance on issues of importance to both countries.
Second, Korea needs to work to improve its image in the United States. Public perception has considerable influence, and many foreign governments carefully manage their public image in order to maximize their respective positions with the U.S. Maintaining a positive public image helps attract supporters and even sympathizers when needed, while a negative public image has the opposite effect. Unfortunately, Korea is currently considered to be one of the least favored countries among the U.S.’s many allies. Korea needs to establish an effective communication program to rectify this perception and promote its positive image in the United States. Such a program will allow Korea to highlight positive news effectively, such as Korea’s commitment of troops in Iraq and Korea’s contributions to the U.S. economy, and to respond quickly to events, statements, and reports in the United States that are critical of Korea.
Thirdly, Lee Myung-bak should pursue the prompt passage of the Korea-U.S. free trade agreement. The Korus FTA will significantly increase Korea’s overall competitiveness and boost exports to the United States by more than $7 billion annually.
Currently, the most significant impediment to U.S. Congressional approval of the FTA relates to beef -- specifically, Korea’s reluctance to accept boneless and bone-in beef of all ages. While from a technical perspective, Korea’s position is understandable, from a logical standpoint it is difficult to justify, given, in particular, the May 2007 finding by the World Animal Health Organization that the United States is a “controlled risk” country for all types of beef.
The Korus FTA is simply too important to throw away based on the beef dispute. Moreover, in reality, the United States and Korea are not far apart on this issue. Also, there is not much time. The first step for Korea is to revive the currently suspended beef negotiations immediately. Given the upcoming U.S. presidential and Congressional elections in November 2008, timing becomes critical as Democratic presidential candidates, such as Hillary Clinton, raise their anti-FTA rhetoric. Accordingly, Korea should seek to resolve the beef issue as soon as possible in an effort to win U.S. Congressional approval of Korus FTA before this summer.
Finally, conditions for foreign direct investment in Korea must be improved. There is a widespread perception in the international financial community that Korea is hostile towards foreign investors and is an inhospitable place to conduct business. The international financial community often cites Korea’s unpredictable regulatory environment as well as its intensely negative public sentiment toward successful foreign investors. The ongoing Lone Star controversy has become an emblematic case in point, straining the economic relationship between Korea and the U.S. and giving credence to the concerns about Korea’s unfavorable investment environment.
This perception hurts Korea, particularly when it is seeking to become a financial hub in Asia. Indeed, in recent years, overall FDI in Korea has diminished. Korea’s FDI peaked in 2004 at $9.2 billion, but fell in 2005 by almost one-third, to $6.3 billion. In 2006, it dropped by more than 40 percent to $3.6 billion. During the same period, the collective FDI of the 30 Organization for Economic Cooperation and Development countries grew by 22 percent. It would thus be in Korea’s interest to rectify this situation as soon as possible.
In addition, Korea must change its existing conditions in favor of a system in which the rule of law is supreme and cannot be swayed by public sentiment or emotion. Only then will Korea gain the confidence of U.S. and other foreign investors.
Korea’s relationship with the U.S. must not be allowed to deteriorate any further. As the administration changes, it is the perfect time for us to mend fences with one of our most important allies.

*The writer is a senior partner at the law firm Akin, Gump, Strauss, Hauer & Feld in Washington, D.C.

by Kim Sukhan

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