It is a week night in central Seoul's Wuahanjib restaurant and the fumes of chargrilled beef mix with the heady smells of garlic and kimchi. 'All Korean beef is eaten within one month,' said manager Han Ju-han of the finely marbled local beef sizzling on the barbecues set into the table tops. 'Imported beef comes a long way, so quality is lower.' This is a common belief - but local beef comes at a price. In a tightly protected agricultural market, diners at Wuahanjib pay 32,000 won (HK$271) for a serving of beef ribs, or 70,000 won for the choicest cuts: Korean beef is the world's most expensive. Meat was very much on the minds of negotiators of the Korea-US Free Trade Agreement, for which the fifth round of negotiations wrapped up in the Montana beef belt earlier this month. The latest session of the tortuous talks were overshadowed by news that South Korean officials had rejected yet another shipment of US beef. Once the world's third-largest market for US beef, South Korea stopped American shipments in 2003 over mad cow disease fears. Imports resumed in October but the first three shipments, totalling nine tonnes, were all halted after minute bone fragments were discovered in the meat - a no-no for Korea. 'We can do more to clarify inspection and rejection protocols,' US Secretary of Commerce Carlos Gutierrez said to a group of businessmen in Seoul last week. 'The beef we export to Korea is the same beef as we eat in the US.' With world trade talks in virtual suspension, nations across the globe have been scrambling to secure free-trade agreements (FTA) with key partners in recent years. Mr Gutierrez called the Korean-US deal 'the most important FTA in 15 years'. Talks started in February, but progress was slow. As well as beef frustrations, Mr Gutierrez said there had been no movement on the two key US areas of concern: improved market access for automobiles and pharmaceuticals. South Korea, meanwhile, demanded that trade remedies, such as anti-dumping penalties, be included in discussions; Mr Gutierrez insisted that this was not part of negotiators' remit but a matter for Congress. Seoul also wanted to include goods produced at the Kaesong Industrial Complex in North Korea in the agreement; Washington disagreed. And the talks had yet to discuss the trade in rice - an enormously emotive issue for Seoul, who wanted it off the agenda. But Washington insisted the Korean-US agreement be a 'gold standard FTA' inclusive of all sectors. The stakes are high. According to American data, the US is South Korea's second-largest trading partner; Korea is America's seventh. In 2005, bilateral trade stood at almost US$72 billion. Studies estimated an FTA could raise US exports to Korea, the world's 11-largest economy, by half. Experts say a deal will grant Korea a critical advantage over competitors China, Japan and Taiwan in the world's largest market and boost the nation's ambitions to become a trade, finance and logistics hub for northeast Asia. It will also upgrade Korean companies' competitiveness, and raise gross domestic product (GDP) by 2 per cent. Despite the reported benefits, a heated debate is raging nationwide, in the newspapers and on the streets, from farms to the National Assembly, over the desirability of the agreement. In recent weeks, demonstrations have shaken the nation, with 30,000 to 70,000 people turning out. President Roh Moo-hyun has championed the FTA. 'Korea is a country that has grown through opening and competition and is confident of its competitive edge,' he said in August. 'The US is the world's largest market. Korea has to win it over there.' However, he is at odds with many in the ruling Uri Party - party head Kim Keun-tae said this month that Korea should not rush into an agreement. South Korea's farmers - some of the world's most passionate anti-globalisation activists - fear they will be submerged if US agricultural products flood in. 'The US wants to monopolise production and distribution of agricultural produce all over the world through economies of scale,' said Lee Young-soo, of the Korea Peasants' League, which claims support from more than 100,000 farmers. 'Rice is related to sovereignty. I believe food and agriculture must not be subject to negotiation.' Although farmers account for less than 4 per cent of GDP and only 7 per cent of the workforce, most Koreans are only one or two generations removed from the countryside, giving farmers enormous emotional clout. Some industrial and service sector unions also reject the FTA on ideological and anti-competition grounds. They are supported by a mixed bag of anti-globalisation activists and anti-US groups; even filmmakers, angry at increased market access for foreign movies, oppose the agreement. 'The FTA serves the profits of big corporations,' said Kim Tae-il, general secretary of the 570,000-member Korea Confederation of Trade Unions at a recent rally in central Seoul. 'Farmers, urban poor organisations and social movements are with us: around 60 per cent of people are against the FTA, according to opinion polls.' 'If there is an FTA, big educational corporations in the US will enter Korea and undermine the public's right to education,' said Lee Byoung-ju, a Korea Teachers Union official. 'Education is not for sale.' In this charged environment, FTA proponents speak with care. Officials of the Presidential Commission on Facilitating the FTA, an organisation responsible for selling the deal to the Korean public, and the Korean trade promotion organisation KOTRA say the issue is 'too sensitive' for comment. And Korean businesses, which will benefit hugely, have kept a low profile. 'It's a little surprising the industrial sector does not have a louder voice,' said Hyun Oh-seok, president of research at the Korea International Trade Association. 'They may think that if some companies benefit, the public, press and politicians might say, 'You'd better compensate affected sectors', and they worry that anti-free-trade groups could initiate 'no purchase' campaigns.' Although, according to the trade association, food prices in South Korea are among the world's highest, local consumer groups have not joined the debate. 'For five decades, Koreans were told that exports were patriotic, so now some consumer groups think foreign products are not safe,' Dr Hyun said. 'Consumer groups are more focused on safety than on budget.' This is not to say that individual Koreans decline cheaper US beef or rice. According to local media, the most popular black market item smuggled off US military bases is American rice. And steak restaurants on garrisons reportedly do a roaring trade from locals. Meanwhile, the clock is ticking. The next round of talks is scheduled for January, but the expiry of US President George W. Bush's Trade Promotion Authority next June creates a de facto deadline for the FTA. And the electoral victories of Democrats are expected to make the passing of a pact trickier in the US. 'Following recent elections in the United States, some argue that the winds may have shifted in favour of protectionism,' Mr Gutierrez said. 'The United States and Korea must make tough political decisions to open our economies to competition.' South Korean bureaucrats, however, cannot necessarily be relied upon to make 'tough decisions'. In the local political climate, those responsible for what the press and the public subsequently consider a bad deal can face retribution. In a recent example, former government officials have been detained by the state prosecution on suspicion that they colluded to sell the then-near bankrupt Korea Exchange Bank at below market prices to US turnaround fund Lone Star in 2003. That deal has drawn enormous public ire over the estimated US$4 billion tax-free profits the fund will make. And with bilateral diplomatic and military relations strained in recent years as liberal administrations in Seoul face off against neo-conservatives in Washington, notably over security ties and North Korea policy, some analysts fear that a failed FTA could poison the alliance further. But there are indications that some influences in South Korea are warming to the FTA. 'The number of rabidly anti-media articles is declining,' said Tami Overby, president of the American Chamber of Commerce in Korea. 'They see that foreign investment and Korea's competitiveness relative to its neighbours is declining, so see an FTA as the best thing they can do.' Other pundits familiar with Koreans' highly emotional national psyche say the turmoil of recent demonstrations and the lack of outspoken support from the elite are simply a cover for a last-minute conversion. 'I think the Koreans have decided they are going to go ahead with this,' said Mike Breen, Seoul-based author of The Koreans. 'But their strategy to explain an unpopular caving in on agricultural market opening will be to take a victim posture, that they were pressured by the US. To do that, they have to negotiate to the final deadline.' The benefits certainly argue for a signing next year. 'I remain cautiously optimistic,' Ms Overby said. 'Once they get beyond the emotion of the issues, there is so much for both sides to gain.'
