Ha-Joon Chang has taught in the Faculty of Economics, University of Cambridge, since 1990. He has consulted for numerous international organizations, including the United Nations, the World Bank, and the Asian Development Bank. He has published eleven books, including Kicking Away the Ladder, winner of the 2003 Myrdal Prize. In 2005, Chang was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought, whose previous recipients include Amartya Sen and John Kenneth Galbraith. Chang’s book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, is among a number of prominent books that have been targeted by the South Korean military in a systematic effort at censorship. Thank you, Professor Chang, for agreeing to have an interview with the Korea Policy Institute. Your new book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, is the most thorough and critical review of the myth of free trade and international development infusing both history and digestible economic analysis. Thank you for this important piece of scholarship. Thank you. Since Chalmers Johnson already provided a brilliant review of your book, we’d like to use this opportunity to take your analysis on free trade and get your perspective on the Korea-U.S. free trade agreement, which is now being considered in the National Assembly in South Korea and it’s soon to be in the United States Congress. Yes. My first question is, in your book, you argue that the neoliberal structural adjustment program pushed onto the Korea economy by the IMF actually worsened the economic situation of South Korea. After the financial crisis of 1997, South Korea is now pushing for a neoliberal trade agreement with various governments, including the United States. What is the relationship between the push for these trade agreements and IMF imposing a neoliberal policy? Yes, the IMF mainly works—although not exclusively—on things like macroeconomic management, monetary and fiscal policy, and the financial sector, but it is basically based on the same intellectual foundation as the free trade agreement. [The South Korean Government] basically wants to institutionalize all these policies that have been used in Korea since the 1990s. It’s one thing to say that we have conservative macroeconomic policies and we welcome foreign investment, and another to sign this treaty, which will mean that when you step outside this boundary, you will actually get punished. So this [Free Trade Agreement] is a political project to consolidate this neoliberal regime in Korea. Your book makes clear that free trade agreements between wealthier developed countries and poorer developing countries cause great poverty and institutionalize global inequality. But what about free trade agreements between the most powerful countries, like the United States, and relatively developed nations like South Korea, are they any better? Yes, my view is that the free trade agreements between countries at similar levels of development tend to be beneficial because it provides bigger markets, greater competition, and so on. When you have free trade agreements between rich countries and poor countries, you have bad effects. But [free trade agreement] is completely wrong dominated by the fact that it basically stops economic development in its tracks. Once you open up to competition from the United States, Switzerland and so on, there’s no way you can develop better industries that will bring you higher income. Now then the practical question in Korea’s case is whether Korea is at a similar level of development with the United States. If that is the case, it might actually be beneficial, but what the people often don’t recognize is Koreans are, in this sense, full of themselves. They think “We are almost, not quite, but almost as rich as the United States and other rich countries,” but forget that their income levels are basically 1/3 of the U.S. level. Recently the dollar has been falling and so Koreans think they have become richer than they actually are in dollar terms, but if you look at all the indicators—the level of income, productivity and manufacturing—basically, Koreans are at about the 1/3 level of the countries like the U.S. and Switzerland. Given that gap, I very much doubt that this will be beneficial for Korea because although there might be some stimulation in terms of greater competition except in areas like automobiles, electronics, ship building where Korea already has international competitiveness, most industries would be wiped out. Advocates for the U.S.-Korea FTA argue that this agreement will improve competition between the farmers of both countries. This is also supported by the claim that South Korean farmers receive too much from government subsidies that unfairly protects them from competition from American farmers. Would this FTA lead to fair economic exchanges in the agricultural sector? The question is what do you mean by fair exchange, fair competition? Because when the players are unequal, equal treatment is unfair. My philosophy isn’t that good but I think it was Aristotle who said the most unequal treatment is the equal treatment of unequal people. And in the case of agricultural competition between Korean and U.S. farmers, this is definitely the case because the two countries have very different agricultural conditions. In one country, you have vast tracts of land, highly mechanized, intensive chemicals, while in the other country you don’t have those kinds of conditions. However hard the Korean farmers try, they’ll never be able to compete with American farmers. And in that case, is it really fair to let them have free competition when they have fundamentally different conditions? Leaping off that question, what about the claim that it’s natural that as South Korea industrializes and shifts to more of an information technology economy, that it’s inevitable for farmers to disappear. I accept that over time Korea will need to reduce its agriculture but the question is whether you want to do it in a shock therapy way. If this agreement is signed then more or less 3 million Korean farmers will be on a retirement plan in the next couple years. Secondly, you cannot treat agriculture in the same way you treat the manufacturing of iPods and things like that because agriculture is closely integrated to the way our land is organized, it has deep implications for environmental protection and like it or not, the whole of our country. Yes, I mean, in theory, there’s no God-given reason why we shouldn’t shut down all the farms, lay the countryside to waste and bring everyone into the city and give the farmers a fat pension. It might even be at one level fair treatment that the farmers get fully compensated, but agriculture’s something more than that. South Korean public health advocates argue that the Korea FTA will potentially wipe out South Korea’s universal health care system, because it will force the South Korean government to include new medicine produced by U.S. pharmaceuticals in their reimbursements. The pro-FTA pharmaceutical lobbyists argue that the passage of the FTA will enable Koreans to have access to cutting edge technology and encourage research that will save lives. Who is right? Well, in abstract, both are right, because patents have this two-side effect, a double-edged sword. So yes, [FTAs] encourage innovation, but it also makes these life-saving drugs very expensive. Once again, you cannot treat life-saving drugs in the same way you treat potato chips or corn flakes. So there’s a big question as to the legitimacy of patents in the international debate about the role of HIV drugs. After all, the patent is a socially sanctioned monopoly. If the government wouldn’t protect patents, the pharmaceutical companies would not have much profit. Now given that they have a social duty to deliver certain kinds of basic services to the society, the pharmaceutical industry’s argument is that they’re self-serving. They only highlight the good side. Of course, it can stimulate innovation as long as they require the fact that the huge profit that they’re making won’t simply be there without patents. So you need to give something back to society. I once read that in a newspaper interview a pharmaceutical executive complaining, “Why are you asking us to solve health crisis in Africa?” I think they have a lot more duty to the society than companies producing chocolate and breakfast cereal because these companies would not exist if we didn’t sanction artificially monopoly on patents. And in the case of the Korea-US FTA, we will basically have to accept the American medical system, which is laggard by international standards. This country spends the highest amount of its income on healthcare and it has one of the lowest health standards in the developed world. The Swedish spend only about ten percent of their income on healthcare and they’re much healthier and they live longer than the Americans. There’s something wrong with the system here and Americans are trying to import that. There’s been speculation that what’s really driving the free trade agreement is the push to privatize South Korea’s financial services. Can you talk about this and how it will affect ordinary working people? Well, I think that there are lots of different motivations behind this agreement. Some Korean manufacturing companies want reductions in two to three percent of U.S. tariffs so that they can sell a bit more, while there are others who are looking more into the financial sector. Yes, I think that there has been a push from the U.S. financial community and also some people in the Korean financial community. We have a number of financial institutions that have been nationalized after the Asian financial crisis because the government didn’t have to inject public money into them. Yes, these guys want these institutions to be privatized so that they can get a piece of action. Unfortunately, we have already seen the negative intentions of this market-driven, American-style financial system in Korea. Several banks have been basically bought up by foreign, mainly American, shareholders, and the way they run the banks has meant the reduction in the quality of services. In the old days, from one point of view, it’s over-manning, but when you went to the bank you immediately got service. Now you have to wait for so long because, like the American way, they under-man the place. The banks have also been lending mainly to households, both secure and un-secure, and not lending to enterprises. This may look good for ordinary people in the short term but in the long run, it hurts them because this means that there are less jobs created, less opportunities for them. So in the short run they may need temporary help with their finances but the whole system has been actually doing a great disservice to the ordinary people because it’s slowing down the economy and reducing economic opportunities. In the United States, there’s a fierce debate going on about the merits of free trade for ordinary American workers. Who would be the principal America-based winners and losers should this free trade agreement be ratified? Well, the losers would be mainly the auto producers and others like electronics and ships but frankly, there’s not much of those left in the U.S. anymore so the main losers will be the auto sector. And the main gainers will be the agribusiness and the financial industry as well as the main branches of the manufacturing of pharmaceuticals. There will be some people who would be very hard-hit by this agreement, and unfortunately this country doesn’t have adequate compensation mechanisms for this kind of thing. In Europe, free trade is less of an issue because they have a good welfare state. So even if you sign this agreement and autoworkers lose their jobs, they don’t have to worry about this healthcare. They don’t have to worry about their children’s schooling because that minimum standard of living is guaranteed and he will be able to get retrained through state subsidies. In those countries, even though there are some people who have been hit by these kinds of agreements, it’s not the end of the world for them. But in the U.S. for some people, this will be literally the end of the world for them, because they lose their income, they lose their healthcare plan, what are they going to do? South Korean capital investment has had a significant impact in changing the landscape of the lives of people in U.S. cities such as Los Angeles and New York. I don’t know if you got a chance to see that while you’re in New York, you’ll see a lot of Korean shopping malls and definitely the presence of South Korean investment. Migration of labor from South Korea has been the same. You see quite an extensive working class in these cities. Should the FTA pass, how do you think it will influence the flow of capital investment and migrants from U.S. to South Korea? Well, in the first place, in relation to labor, South Korea has the same tools to secure any kind of guarantee about migration in this agreement. So countries like Australia was able to guarantee somewhere between 4000, 5000 working visas issued every year. And South Korea seemed to secure that, so I doubt this will change the migration flow a lot. In terms for capital investment, the only reason why the Korea-US FTA might increase Korean investment into the U.S. is through the so-called investor protection clause like Chapter 11 in NAFTA, which gives enormous leverage for the investors of the host government. But the question is whether the lack of it has really been preventing Koreans to invest in the U.S. side. Before the start of this new agreement, I’ve never heard any complaints along that line. Now, my final question is, if you had the chance to brief presidential candidate Obama’s trade ministers, what would you say, what would you tell them? Well, I think externally, the U.S. should stop promoting free trade among poor developing countries. There’s enough evidence, which now even the World Bank indirectly admits, to show that these policies have not worked for these countries and externally, they should, first of all, stop pushing these ideas. And secondly, they should stop pushing for bi-lateral free trade agreement with other countries because we have, despite its problems, a functioning multi-lateral system called the WTO. And all these bilateral free trade agreements are disrupting this mechanism. Despite its name “free trade agreement,” when its bi-lateral, it’s not a free trade agreement because if you are giving free market access to, say, American cars or chemicals, you are implicitly discriminating against German cars and Japanese chemicals. So actually, even if you believe in free trade, actually, if you are a true believer in free trade, you have to support this multilateral system. And this is why more intelligent free trade economists like Professor Bhagwati of Columbia are very critical of this bi-lateral free trade agreement because for them they are intelligent enough to know that this is not a free trade agreement. Secondly, that the new incoming government should stop pushing this bi-lateral agreement. And thirdly, internally this leads back to the point I made earlier, the U.S. should try to build up its welfare state if it’s really intent on pursuing free trade for itself. As I explained earlier, why are some Americans so opposed to free trade? They may not have all the economics to understand everything but they are intelligent enough to know that this is going to be the end of the world for them. If I were in their position, I would take to the streets and protest. In Europe, in contrast, you don’t see that kind of protest that much, although you have the famous French farmers, because people say, “I don’t want to lose my current job, but it’s not the end of the world.” So if the U.S. is actually going to pursue the free trade, which I think it should among rich countries, then it should reform its welfare system so that people don’t have to worry about these risks that open us inevitably. I put it in the following way, that sometimes you can drive a car 18 miles only because you have brakes. If you don’t have brakes, then probably even the most skillful driver will be able to drive only 13 miles. In the same way, people can actually be even more forward looking in making choices, they can be more risk-taking, they can be more innovative when they know that failure doesn’t mean you are being throw into the scrap heap of the future. So for that reason, if you want to pursue free trade, please revamp the welfare mechanism. Transcribed by Sarah D. Park

On June 10, one million South Koreans from all walks of life poured onto the streets of Seoul, the nation’s capital, to protest the newly elected President Lee Myung Bak’s deal with the United States to fully open Korean markets to U.S. beef. Despite widespread concerns over the safety of U.S. beef imports, Lee acted quickly to lift the partial ban on U.S. beef to pave the way for the passage of the U.S.-South Korea Free Trade Agreement (FTA). Lee knew that there would be no FTA unless Senate Finance Committee Chairman Max Baucus (D-MT) got the green light for the U.S. beef industry to fully resume exports to South Korea, which banned U.S. beef in 2003 after the discovery of a cow with bovine spongiform encephalopathy (BSE). Protests began six weeks ago by high schools students and housewives concerned about the safety of U.S. beef appearing on their plates. It soon evolved into a massive campaign to bring down the Lee government. Anger against the deal quickly spread throughout the country, and within 40 days, the number of protesters grew from thousands to one million. “In the beginning it was about the beef,” says 29-year-old Park Kyung Kun of Seoul, “but now it’s about democracy. We want democracy back.” To the rest of the world, South Korean protests over the safety of U.S. beef are portrayed as an expression of simmering anti-Americanism. Without a doubt, anti-American sentiments have historical roots. But Koreans also have a legitimate claim to fear the safety of U.S. beef. Beef Recall Last year, some 200 million pounds of beef were recalled from the U.S. food supply. In just one recall, the U.S. Department of Agriculture (USDA) recalled 143 million pounds of meat from just one company alone, the Westland/Hallmark Meat Company. Meat from this slaughtering house has been distributed throughout the National School Lunch programs. And despite the recall, very little was returned because most of it had already been consumed. “Over the past few years, several hundred million pounds of U.S. beef have been recalled,” says Dr. Michael Greger of the Humane Society of the United States. “This is a staggering amount,” says Greger. “No wonder Koreans are concerned.” The USDA tests approximately one out of every 1,000 cows. In real numbers, only 40,000 cows are tested of the 37 million cows slaughtered annually. Meanwhile, Japan surveys every cow, Europe one in four, and Canada one out of 250. The USDA devotes just two percent of its overall $90 billion dollar budget and just two percent of its entire 100,000-person staff to “enhance protection and safety of the nation’s agriculture and food supply.” It’s no wonder why 65 countries, including the European Union, restrict U.S. beef imports. Since 2003, three cattle from the United States have been infected with mad cow disease. Given the fatality of mad cow disease, Americans would assume that the USDA is pushing for more testing of the beef industry. To the contrary, Congress hasn’t even passed a ban on eating downed animals. These are animals that are too sick or injured to even walk and are literally being dragged into the slaughterhouse. Rather, the USDA is prosecuting companies who want to conduct their own testing. In 2007, the USDA prosecuted Creekstone Farms for wanting to test with their own money every one of their own cattle for mad cow disease. They won the right to test in Federal Court, but in May 2008, the Bush administration reversed the court decision allowing the meatpacking company to market its products as BSE-free. Open Door Policy Another reason why South Koreans are so roiled is because the beef protocol will allow in nearly all forms of American beef into the Korean market and will weaken the controls the Korean government has traditionally used in case of suspected problems. The April 18, 2008 deal scraps the important qualification Lee’s predecessor Roh Moo Hyun included in the side deal it negotiated last year ensuring that imported beef must be free of “specified risk material” for BSE, such as bone fragments. South Korean Trade Minister Kim Jong-Hoon is now in Washington to renegotiate yet another voluntary regulation system. According to this protocol, U.S. beef companies would self-label the age of the cattle where the beef came from. But South Koreans have already seen how ineffective this voluntary system works. Last year, when South Korea partially lifted its ban to allow boneless beef and beef from cattle under aged 30 months, the first three shipments of U.S. beef to Korea contained bone fragments, including one shipment that contained an entire spine. The voluntary system still doesn’t address the “Specified Risk Materials” (SRMs) that are highly susceptible to BSE. Most Koreans eat 85 parts of the cow, compared with Americans who eat only about 10 parts. And Koreans eat parts of the cow that are highly susceptible to prions that huddle in certain areas of the brain, eyes, intestines, spinal cords and backbones-this is anatomical and scientific, not hysterical. By the time these prions invade our immune systems, humans are exposed to a fatal, neurodegenerative disease with no cure: Creutzfeldt-Jakob disease. It riddles our brain with holes. And this isn’t something that one can just cook out of the meat, compared to most other food-borne pathogens. So it’s up to the meat industry to make it safe and the USDA to ensure that it doesn’t end up in our food supply and on our plates. In the end, it is up to Koreans to determine their own food safety standards. These are government regulations and policies, and therefore must be democratically decided. They should not imposed by another country, especially one that has such a questionable track record. Christine Ahn, a senior analyst for Foreign Policy In Focus, is a policy analyst with the Korea Policy Institute.

On April 11, the Center for Disease Control (CDC) released a report that found that of the national efforts to improve U.S. food safety, “none of the targets were reached in 2007.”1 According to the CDC, 76 million Americans — one in four — come down with food poisoning every year.2 Among the most common is E. coli, a byproduct of the system of industrialized animal agribusiness. Americans have a common perception that the problem stems from food coming from outside the country—from China, say, or Mexico. Instead, it’s our food that’s the problem. Instead of cleaning up its own act, the American meat industry has shifted responsibility to the consumer — not just in the United States, but also in countries where U.S. meat is exported. The United States is using bilateral trade agreements to arm-twist weaker countries into accepting its food safety standards as a tool to expand the market control of U.S. corporations. South Korea is the latest victim. In June 2007, the United States and South Korea signed a free trade agreement (FTA) that now awaits ratification in the ROK National Assembly and the U.S. Congress. A pre-condition for negotiations was a commitment from South Korea to lift its ban on U.S. beef, which had gone into effect in 2003 after the discovery of a U.S. calf with mad-cow disease. In order to get the FTA talks rolling, South Korea’s former president Roh Moo Hyun partially lifted the ban, allowing boneless beef and meat from cattle aged under 30 months to reach Korean markets. However, subsequent shipments of U.S. beef have been quarantined and returned for containing bone fragments, including a beef shipment last July that contained an entire spine. These discoveries in South Korea — coupled with more recent episodes such as a rat found last month in frozen vegetables imported into Korea from the United States and the release of a Humane Society video showing abuse of downer cows at a Westland/Hallmark Meat Co slaughtering house that resulted in the largest recall of beef in U.S. history — have reinforced concerns within the Korean public. This would normally spell trouble for the pro-FTA lobby since Senate Finance Committee Chairman Max Baucus (D-Montana) has said that he wouldn’t even entertain the FTA unless South Korea lifts its ban on U.S. beef. However, the U.S. meat industry, and its allies in the Bush administration, is lobbying Korea with all its might to lift the ban before week’s end.3 “There is a lot of pent-up interest in the market,” said Assistant U.S. Trade Representative Wendy Cutler of these U.S. beef corporations. Although the new conservative president, Lee Myung-bak, visits Washington this week to affirm South Korea’s commitment to the FTA and the U.S.-ROK military alliance, he may not have enough votes in the National Assembly to dismantle Korea’s domestic health laws to accommodate U.S. corporate interests. Beef in Context The U.S. beef industry’s battle against Korean consumers is part of a larger corporate food safety agenda advanced increasingly through bilateral channels. The strategy is codified in terms like “science-based,” “equivalence,” and “harmonization.” Powerful countries are using bilateral agreements to compel weaker countries into accepting their food safety standards and expand the market control of their own corporations. With Korea, the United States has been insisting that no free trade deal is possible unless Korea changes its food safety import regulations for beef, recognizes U.S. beef inspections as equivalent, and opens its market to cheap U.S. beef imports. Most Koreans are dead set against these U.S. demands: a recent poll found that 87% of Korean housewives believe American meat is “unsafe.”4 Koreans not only want to protect their local farmers, who will, with the implementation of the FTA, face competition from tariff-free subsidized U.S. beef imports. They are also justifiably concerned about the safety of U.S. meat, especially when it comes to BSE or Mad Cow Disease. Korea, like many other countries, enacted a complete ban on U.S. beef when a case of BSE was detected in the United States in 2003. Ever since, the United States has pushed hard to regain valuable beef export markets in Korea and elsewhere through a twin process of defining its own BSE inspection system and getting the rest of the world to accept this system as safe. Not being able to convince authorities in key markets like Japan and Korea about the merits of its BSE control efforts, the United States has looked for leverage elsewhere, mainly with the World Organization for Animal Health (OIE), the international standard setting body for animal health recognized by the WTO. The U.S. strategy at the OIE has been to change the guidelines covering trade from countries with BSE so that a country’s status is based not on the presence of BSE but on a “scientific risk assessment” of the safeguards that a country adopts to keep BSE out of exports. The United States moved this process along in 2003 by creating a new status of “minimal risk” for countries exporting to the United States.5 It then successfully pushed for a resolution at the OIE in 2005, which was adopted in 2006, where the five original categories for classifying a country were reduced to three and modified into the new categories of “negligible BSE risk,” “controlled BSE risk,” and “undetermined BSE risk.” Moreover, where the OIE previously only ruled on a country’s claim to be BSE-free, now the OIE could rule on whether a country should be considered a “controlled risk,” greatly facilitating that country’s ability to export.6 At its May 2007 General Session in Paris, with Korean protestors outside in the streets, the OIE issued its first list of “controlled risk” counties, with the United States not surprisingly making the cut.7 The United States immediately used this ruling from the OIE to push hard for the opening of markets to U.S. beef. “We will use this international validation to urge our trading partners to reopen export markets to the full spectrum of U.S. cattle and beef products,” said Mike Johanns, U.S. secretary of agriculture. “We will use every means available to us to ensure that countries rapidly take steps to align their requirements with international standards.”8 Although the OIE ruling in no way forced it to change its regulations, Korea faced the added pressure of the FTA negotiations. It ultimately reopened its markets with the proviso, well within OIE guidelines, that the beef be free of specified risk material, such as bone fragments. When Korean authorities detected such bone fragments in the first three shipments of U.S. beef (as well as trace levels of dioxin exceeding approved levels in the third shipment), they rejected the meat. Then, in June 2007, Korea decided to suspend all export permits to U.S. suppliers when two shipments of beef products originating from Cargill and Tyson were exported to Korea without the necessary quarantine certificates.9 Rather than deal with the problem, U.S. beef corporations, backed by Washington, insist that Korea change its criteria on bone fragments and start letting U.S. beef in, bone fragments and all. Otherwise there would be no FTA. Beef and Free Trade Other countries have already signed away the right to block U.S. meat exports, not only for BSE concerns in beef but for a whole range of food safety and animal health concerns that afflict the U.S. meat industry. The U.S. meat industry has been very careful to insist that the FTAs cannot only deal with lowering tariffs; they have to also strip countries of their rights to define their own sanitary and phytosanitary (SPS) standards in order for U.S. meat to get guaranteed market access. The big U.S. poultry companies have been particularly ferocious in this regard. For these companies, exports are critical because, with domestic demand mainly for white meat, they generate an enormous and growing surplus of chicken leg quarters (dark meat).10 But most export markets refuse to take their chicken leg quarters because of food safety and animal health concerns, such as hormone and antibiotic residues, and because they undercut domestic producers with ridiculously low prices. So big U.S. poultry corporations like Tyson and Cargill look to the FTA processes as leverage to push open markets– by simultaneously reducing or eliminating tariffs and locking countries into U.S. food safety standards. The FTA with Morocco set an early precedent. The country drastically reduced tariffs and then agreed to accept export certificates from U.S. inspectors “as the means for certifying compliance with standards on hormones, antibiotics, and other residues” for beef and poultry.11 Subsequently, under a separate SPS agreement within its FTA with the United States, Panama agreed to recognize the equivalence of U.S. meat inspections and the U.S. beef grading system, to grant access to all U.S. beef exports consistent with OIE standards, and to lift its formerly strict import certification and licensing requirements.12 The CAFTA agreement, which is gradually opening Central American countries to tariff-free imports of chicken leg quarters from the United States, was another important victory for U.S. poultry corporations. Given the strong, politically-connected Central American poultry companies that had grown up under trade protections, the United States was particularly concerned that the openings on tariffs agreed to under the FTA would spark “a movement among Central American poultry producers to block entry of U.S. poultry and products through the use of sanitary technical barriers.”13 Most of the SPS complaints coming from the United States concerning poultry are not new. El Salvador, Honduras and Costa Rica have long-standing zero tolerance policies on Salmonella, which effectively prohibits imports of raw poultry from the United States, where Salmonella is rampant in the poultry industry.14 Honduras also has strict policies on avian influenza that have raised the ire of the U.S. poultry industry. U.S. complaints about these measures being “arbitrary” and not based on science have not had much traction though, given that these countries are self-sufficient in poultry production. But the FTA negotiations changed the dynamic. The United States used a parallel working group on SPS to “leverage the impetus of active trade negotiations to seek difficult changes to the countries’ SPS regimes.”15 By way of this working group, all the countries agreed to “recognize the equivalence of the U.S. food safety and inspection system – eliminating the need for plant-by-plant inspection.” The U.S.-Peru FTA was a particularly crushing win for corporate chicken. Sara Lilygren, vice president for federal government relations for Tyson Foods, called it “the best market access arrangements for poultry ever negotiated in a free trade agreement.”16 Tyson and other U.S. poultry corporations won immediate and expanding tariff-free market access for chicken leg quarters and a specific commitment from Peru to recognize both the U.S. system for determining disease status and the U.S. inspection system for poultry slaughter and processing facilities. “In the past, U.S. poultry exports to Peru have been blocked by Peruvian regulators on grounds that the U.S. product allegedly posed a threat of avian influenza and Newcastle disease or even Salmonella,” said Tyson’s Lilygren. “Hopefully, the commitments that Peru has now made to respect decisions of U.S. animal health regulators will ensure that the U.S. industry will benefit immediately from the market access provisions of the agreement and will not have those benefits blocked by the imposition of non-tariffs barriers in the form of dubious SPS requirements.” As a result, Peru and other countries that have signed similar agreements will have to accept the dumping of poor-quality U.S. meat into their markets. The impacts will be immediate and brutal for local industries, especially for the small producers. A few local companies may survive, by consolidating and expanding their operations internationally, such as the Multi Inversiones poultry group of Guatemala, which has expanded into neighboring countries and Brazil. While FTAs may conceivably give local poultry producers some access to U.S. markets, in practice the U.S. inspection system tends to block out all but the biggest. Only three poultry plants are certified for export to the U.S. in Chile, two in Costa Rica, and zero in El Salvador, Honduras, Guatemala, and Morocco. Poultry plants in Mexico, a large poultry producer sitting next door to the U.S. market, can only get approval to export processed poultry products slaughtered under federal inspection in the United States.17 Meanwhile, the big U.S. poultry companies are following-up on this new market access by buying up local producers and directly integrating them into their transnational production chains, as Cargill has recently done with the take over of two important poultry companies in Honduras and Nicaragua.18 GM Food, Too The Bush administration’s attack on Korea’s food safety standards through the FTA was not limited to beef. In a reported swap for Seoul easing its rules of origin for U.S. textile exports, Korea agreed to lower its domestic biosafety standards. The deal, signed on the sidelines of the final round of U.S.-Korea FTA negotiations in late March 2007, is called the U.S.-Korea “Memorandum of Understanding on Agricultural Biotechnology.” Immediately hailed as a great breakthrough by the Washington-based Biotechnology Industry Organization, the agreement took Koreans by surprise, generating angry reactions in the formal political arena, in the mass media, and on the streets.19 The U.S.-Korea ag-biotech agreement obliges Korea to restrict its risk assessment of imported GM products for food, feed, or processing to their “intended” use. In other words, if local farmers sow GM maize kernels from the United States that were meant for cooking, the U.S. companies responsible for the transfer of the kernels are free of any liability. This is precisely how Mexico’s indigenous maize crop got contaminated. The agreement also commits Korea to act on its GM labeling laws in a “predictable” manner. This common aspect of most U.S. FTAs, which goes under the misleading label of “transparency,” in fact grants Washington the right to meddle in policy decisions in Seoul. Finally, Korea’s implementation of the UN Biosafety Protocol, which the United States refuses to sign, is bound to the terms of this bilateral agreement with Washington. In this case, as in other FTAs, the United States is exempt from the Protocol’s documentation requirements for the entry of GM crops. With the ink on the agreement barely dry, American GM crops began to penetrate Korea’s food supply. Until recently, Korean GM laws, particularly the rules on labeling, had essentially shut GM imports out of the country’s food supply, except for some use in animal feed, soybean oil, and soy sauce (the latter two products deemed exempt from mandatory labeling requirements because their production processes are said to remove the GM proteins). But in February 2008, less than a year after the signing of the ag-biotech agreement and just three months after Korea ratified and brought into force the Biosafety Protocol, the Korean Corn Processing Industry Association purchased 697,000 metric tons of U.S. GM maize for shipment between April-August 2008: the first major shipment of GM maize destined for food use to arrive in Korea since the adoption of the GM labeling law in 2000. Similarly, Korean approvals of GM imports have skyrocketed since the U.S. agreement. By January 10, 2008, there were 58 living modified organisms (LMOs) approved for import as feed or food into Korea. One month later, the number had nearly doubled: 102 approvals, 70% of them from U.S. firms (Monsanto, DuPont, and Dow). Korea is not the first country to cede its sovereign right to control biotech foods under pressure from U.S. corporations in bilateral negotiations. India and China both backed down from GM import restrictions after bilateral “discussions” with the United States.20 Thailand pulled back from strict GM labeling legislation in 2004 when the United States warned that the legislation would affect their FTA negotiations. More recently, U.S. corporations have called on the U.S. government to use the proposed FTA with Thailand to force it to start allowing field-testing of GMOs. The same goes for Malaysia, where U.S. corporations want the Malaysian government to back down from consideration of mandatory labeling of GM products as a prerequisite for the proposed U.S.-Malaysia FTA.22,23 Battle for Food Sovereignty The use of bilateral free trade agreements to rig food safety standards in favor of a rapidly concentrating global food industry is cause for concern — all the more so during a deepening world food crisis. To most people, food safety should have something to do with health, as well as cultural prerogatives. That agenda, however, has been hijacked. As tariffs and quotas are torn down under the mantra of trade liberalization, food safety is becoming a major offensive tool for industrial titans like the United States or Europe to not only get market access for exports but to reduce competition from imports (in the absence of tariff and quotas). Equivalence, which all WTO members are supposed to implement, between different countries’ food safety standards doesn’t mean harmonizing up to higher standards. It means equivalence with those of the more powerful country, which in the case of the U.S. means harmonizing down to the lowest common denominator. The U.S.-Korea FTA bears this out dramatically. Sad to say, food safety has become a bargaining chip in the struggle for corporate control. This raises an important challenge for the food sovereignty movement. Aside from some boycotts and recalls, real decision-making on food safety standards is not in the hands of ordinary people or even competent regulators. Instead, food safety is determined more and more in corporate boardrooms and trade negotiations. Perhaps the lessons being learned from different experiences fighting FTAs in different countries will lead to stronger campaigns to regain control over the issue of food safety within the larger battle for real food sovereignty. * Christine Ahn is a policy analyst with the Korea Policy Institute and a member of the Korean Americans for Fair Trade. GRAIN is an international non-governmental organization with 13 staff in nine countries spread across five continents to promote the sustainable management and use of agricultural biodiversity based on people’s control over genetic resources and local knowledge. GRAIN also collaborates with www.bilaterals.org and helped produce www.fightingftas.org.

On February 2, 2006, the United States and the Republic of Korea (South Korea) announced that they would open talks on a bilateral free trade agreement (FTA) between the two governments that would remove protective trade measures such as tariffs and import quotas. Annual U.S.-South Korean trade tops $74 billion, and the proposed FTA would be the largest for the U.S. since the controversial North American Free Trade Agreement (NAFTA) was passed in 1994. Despite the huge impact that this FTA would have on ordinary citizens in both countries, there has been very little American media attention to the talks. While members of Congress often speak of trade issues, until recently few have focused their attention on this specific FTA. Even the vocal opposition to the FTA of Democratic Presidential candidate John Edwards, recently joined by Hillary Clinton, has not drawn significant attention to the FTA. When FTA negotiations formally opened in June 2006, pro-FTA interests in the U.S. and South Korea’s chaebol pressed their respective government officials to come to a quick agreement in order to take advantage of “fast-track” authority afforded by the Trade Act of 2002. Fast-track allows the President to negotiate international trade agreements and submit them to Congress for a mandatory vote without possibility of amendment. This authority expires on July 1, 2007. Because fast-track requires that Congress be given at least 90 days to examine any agreement reached by negotiators behind closed doors, the effective deadline for coming to an agreement was April 2, 2007. Not coincidentally, the two sides announced on April 2 that they had come to an agreement resulting in tariff reductions on approximately 90 percent of all imported industrial and agriculture products, covering areas including but not limited to automobiles, competition policy, e-commerce, transparency, pharmaceuticals/medical devices, intellectual property rights (IPR), investment, and services. However, it has become increasingly clear that negotiators did not have a complete deal in place before the deadline. Instead, they rushed to sign what amounted to an incomplete agreement amidst mass protest in South Korea in an effort to ensure that the FTA would be considered under fast-track. The U.S. Trade Representative (USTR) continues to state that significant aspects of the FTA will have to be renegotiated in order to get through Congress. That actual negotiations are taking longer is not surprising given that South Korea’s FTA with Chile, despite significantly lower trade volume, took three years to negotiate, yet South Korean and U.S. negotiators attempted to rush through a deal in less than 10 months. The text of the FTA was released on May 24—almost eight weeks after the deal was announced—and Congress will not have the opportunity to undergo the mandated 90-day review period before fast-track expires at the end of June. Thus far, the April 2 announcement has provided sufficient political cover for USTR’s assertion that the FTA should be considered under fast-track. Fast-track is inherently a closed process, designed to cut the voices of our Congressional representatives out of the mix. The limited public discourse in the U.S. about its trade policy is reflective of this antidemocratic approach toward trade policy, and unfortunately the 2006 election of the Democratic Congressional majority may not result in a fundamental change. On May 10, a handful of leading Democrats announced a deal with the Bush Administration that likely ensures the passage of FTAs with Peru and Panama, may become a template for the South Korea and Columbia FTAs, and potentially extends fast-track authority beyond July 1. Not a single labor union, environmental or public interest organization, or consumer rights advocate was consulted on this deal, and even the Democratic Caucus was not informed much less consulted about the deal until it was already in place. Proponents of the deal have suggested that it requires FTAs to have provisions protecting labor and environmental standards, but unlike legal rights already given to multinational corporations, there are no guarantees that trade unions and environmental protection groups would be able to enforce these standards in international courts. Not surprisingly, early estimates suggest that a very large majority of Democrats will be voting against the deal. In South Korea, FTA negotiations have unfortunately been marked by a return to the authoritarian practices of past dictatorships. In March of 2006, some 270 civic organizations representing millions of workers, farmers, intellectuals, artists, and citizens announced the formation of the Korean Alliance Against the Kor-US FTA (KoA). In response to KoA and South Korean labor union efforts, police issued summons and warrants for more than 170 social movement leaders, raided local offices of civic organizations, detained leaders of farmers and workers organizations and even made threatening phone calls to potential participants of public rallies. Tens of thousands of police officers were deployed on major roads leading to Seoul to prevent workers and farmers from exercising their freedom of assembly and travel. South Korea’s National Human Rights Commission has suggested that the government’s tactics are inconsistent with the South Korean Constitution, but this did not stop the administration of former labor lawyer-turned-President Roh Moo Hyun from outlawing public demonstrations opposing the agreement and blocking anti-FTA advertising from appearing on television while simultaneously airing pro-FTA government commercials. The attempt to control public debate has driven the widespread sense that the government illegitimately locked farmers and civic organizations out of the democratic process. Polling in late March saw 83 percent of the South Korean public voicing opposition to having the Roh administration concluding the trade agreement, favoring instead having the next South Korean government negotiate any accord. Historical Relations of Trade South Korean public engagement with the FTA has been ubiquitous since negotiations began, and important sectors of South Korean civil society mobilized early and often to bring attention to the FTA. The Korean peninsula’s intense focus on trade relations with the U.S. has deep roots, and South Koreans are more likely than Americans to have some familiarity with the historical relations of trade between the U.S. and Korea. In 1866, the heavily-armed gunship General Sherman entered Korean waters in an effort to negotiate trade relations. There without permission, the ship declined to turn back after being told it was unwelcome. Accounts differ as to who fired first, but in the end the ship was burned down and the mercenary crew was killed. This led, five years later, to the first explicit U.S. military incursion into Korea when the U.S. government, determined to force Korea into trade relations, sent ships and Marines to demonstrate both U.S. intentions and strength, leading to the deaths of several hundred Koreans. Inequality between the two nations was formalized through the 1882 Treaty of Chemulpo, negotiated not by the U.S. and Korea, but by the U.S. and China. The U.S. acquired extraterritorial rights, consular representation, fixed tariffs, and port concessions in Korea while China maintained Korea as a geographic buffer. Koreans received no material benefits from the agreement, but understood the treaty as obliging the U.S. to protect what was left of Korean sovereignty from encroachment by other nations. This impression was dashed in 1905 when the U.S. and Japan signed the secret Taft-Katsura Agreement that ensured American noninterference in the Japanese colonization of Korea, and Japanese noninterference in the U.S. colonization of the Philippines. The total loss of Korean sovereignty was formalized in 1910 by Japan’s annexation of Korea, and effectively rendered trade relations between Korea and the U.S. as relegated and mediated by America’s relationship with Japan. U.S. trade with Korea per se was thus a non-issue until after the hot phase of the Korean War ended in a military armistice, after which Korea was divided. The U.S. positioned the southern half of the peninsula as a buffer for its interests in developing post-World War II Japan. The U.S. decision to base much of the industrial support of the Korean War in Japan helped propel Japan’s economic rise; even as the Korean peninsula was being laid to ashes, Japanese industry developed rapidly in order to service U.S. forces. (South Korea’s economy received a similar jumpstart from the destruction of Vietnam.) It was not until the early 1960s that U.S. economic policy toward South Korea began to emphasize developing the South Korean economy through the extraction of manual labor. The development of South Korean industry could also be folded neatly into the Japanese economy by ensuring that Japanese technology undergirded South Korean manufacturing, so that South Korean economic gains would inevitably help Japan, and thus conform to US economic planning for Northeast Asia. The economic development of South Korea was also important for U.S. Cold Warriors who sought to present it as an example of a functioning non-communist economy. The central U.S. foreign policy interest in South Korea was, after all, anti-communism, and not the democratization of South Korea nor the development of a laissez-faire capitalist economy. The U.S. supported the military dictatorship of Chung Hee Park so long as the regime remained intensely anti-communist, and it backed Park’s economic plan although it heavily emphasized state manipulation of the economy. The U.S. tolerated South Korea protectionism of its developing industries and opened key U.S. markets for these industries. U.S. interests changed with growing U.S. trade deficits beginning in the 1970s and the collapse of the Soviet Union, leading the U.S. to no longer support Korea’s protectionist policies. By the end of the 1980s, the U.S. successfully applied bilateral pressure through Section 301 of U.S. trade law and multilateral pressure through international economic agreements to force South Korea into lowering its trade barriers. The changing policies toward Korea are thus a historical reflection of shifting U.S. interests and its position in the world. U.S. interests were served by “opening” Korea in 1866, and they were served by closing Korea through Taft-Katsura in 1905. During the Cold War, U.S. interests were served by protecting South Korean industries, but today U.S. interests are being served by an ongoing “second opening” of Korea for U.S. corporate and agribusiness access. Labor Rights, Wages and Lessons from the Past Of course, not all sectors of the U.S. will benefit from this second opening. In particular, U.S. labor unions fear a repeat of past experiences with South Korean trade relations. The economic development of South Korea that began in earnest in the 1960s was accompanied by a decline of manufacturing jobs in the U.S. and the weakening of organized labor, as U.S. corporations took their factories to Asia and other parts of the world. Park’s iron fist ensured intense state and corporate-sponsored repression of workers who suffered in some of the worst working conditions in the world. The hyper-exploitation of South Korean workers meant that American manufacturers in the early 1960s could calculate that the labor cost saving for firms willing to move to Korea was a factor of 25, since South Korean workers were paid one tenth of American wages but were 2.5 times more productive given, for example, the extraordinary number of hours they put in per day, the lack of overtime, and the six-day work week. The migration and transformation of good jobs in the U.S. into bad jobs in South Korea is thus inextricably linked to the historical and continuing labor exploitation in South Korea. U.S. labor unions cannot be happy about the passage of the FTA given the implications of the current state of South Korean worker’s rights and labor conditions. The country’s economic freefall during the 1997 Asian financial crisis afforded the South Korean state and the chaebol an opportunity to reverse hard won gains of the South Korean labor movement, and since then workers have been fighting off declining working conditions, wages, and benefits. “Irregular workers,” who possess fewer labor rights and benefits and are hired on a temporary basis, currently constitute over half of all South Korean workers. Widespread state efforts to prevent the rise of independent unions have been a staple feature of South Korea since right-wing groups with U.S. backing created the Federation of Korean Trade Unions (FKTU) in 1946. Lacking a grassroots base, the FKTU raison d’etre was to compete with and destroy independent labor organizations. Although the FKTU has changed considerably since then, the South Korean government continues to demonstrate a willingness to intervene in the internal affairs of independent unions that emerged despite intense state and corporate-sponsored violence against workers. Labor demonstrations and protests were regularly broken up in the 1960s and 1970s by violent (public and private) police actions, and this continues to occur under Roh Administration. South Korean practices still do not reach international standards for worker’s rights and benefits. Key deficiencies include the prohibition of multiple unions at the enterprise level, continuing restrictions on government employee rights to organize, an overly broad definition of “essential public services” where the right to strike is repressed or prohibited, the prohibition for unemployed or dismissed workers to become or remain trade union workers, and the requirement for notification of third parties to industrial disputes. Agriculture and Korea’s Culture The rapid rise of industrial development in South Korea whereby good jobs in the U.S. turned into bad jobs in South Korea also saw a migration of Koreans from the countryside into the cities. In order to generate the labor force necessary to generate such rapid industrial development in urban areas during the 1960s and 1970s, Park kept grain prices below market rates and thus artificially expanded the labor pool in industrial centers as farmers were driven off their land even when they had bumper harvests. South Korea experienced an extraordinarily rapid—and generally unwilling—population shift from rural areas to the urban core, with farmer-turned-worker’s wages kept down as management rationalized that labor could be paid less since the market cost of food fell during this time due to the state’s pricing policies. This migration is relevant to current FTA talks because the negotiation of free trade policies covering agriculture are socially and politically complicated by the fact that so many South Koreans living in cities, only one generation ago, were living on family farms. Many South Koreans continue to have strong connections to their rural roots given how recently their personal lives diverged from decades if not centuries of family farming. The Korean peninsula has maintained a domestic agrarian economy for millennia, and the significance of farming goes beyond the economic into every aspect of South Korean society and culture, and especially in ordinary South Koreans connection to the land. Because Korean society was—and continues to be—so intimately tied to agricultural society, much of Korean culture as a whole is intimately based upon customs that have emerged through the cultivation of land. For many South Koreans, the relationship of low prices to the demise of family farms is not the theoretical abstraction that it is for advocates of neo-liberal policies who have not experienced the personal consequences of these policies, including rapid social, familial, and geographical dislocation. South Koreans experience the demise of South Korean agriculture as a loss of both national and family history and culture. Consequently, much of the South Korean population finds it not just appropriate but necessary to protect indigenous agriculture and support measures that they view as preserving South Korea’s national heritage and their family history. The importance of protecting agriculture not simply as an industry but as Korea’s history, culture, and land, has been reinforced by the rise of a middle-class environmental movement, the farmer and peasant movement, and their urban-based allies. In a particularly powerful example of the importance of agriculture to the average South Koreans, the three largest department store chains in South Korea—Lotte, Hyundai, and Shinsegae—each independently decided against purchasing cheaper imported rice and offering it to consumers, for fear of a public backlash against their chains that will influence their ability to sell other products offered at their stores. The South Korean agricultural sector is not export-oriented but instead strives to be self-sufficient in rice, horticultural products, and livestock production. Except for rice that works under a quota system, South Korea places a substantial tariff on agricultural products in order to protect these industries. Nevertheless, South Korea already imports about 60 to 0 percent of its agricultural products, and this percentage is certain to rise under the proposed FTA. South Korea currently has roughly 3.5 million farmers, or about 7.5 percent of the population. All farming in South Korea is done by individual farmers with small- to medium-size holdings, and the average American farm is 58 times larger than the average Korean farm. Like small family farmers in the United States, South Korea’s farmers cannot compete with large U.S. agribusiness capable of producing low-priced goods with the aid of significant U.S. government subsidies that will continue whether or not the FTA passes. Agricultural provisions in the new KORUS-FTA is likely to obliterate this indigenous base of family farmers, with at least half of Korea’s farmers expected to lose their farms. Those who can will enter urban areas in search of work, but half of South Korean farmers are now over 60 years old. Because we are not talking about simply about dollars and cents and won, but rather, about South Korean concerns over the preservation of its cultural and familial heritage (and for some South Koreans, their sovereignty as a food-secure nation), the rise of American agribusiness and the concomitant decline of South Korean family farmers are likely to result in intensified anti-Americanism not only in the agricultural sector, but through various sympathetic sectors within civil society. The sense of cultural loss and anti-Americanism is likely to be exacerbated by the recognition that the demise of South Korean family farms will come not at the hands of other family farmers, but rather by the entry of subsidized U.S. agribusiness. Conclusion The FTA negotiations between the U.S. and South Korea come at the height of strained relations between the two countries, with anti-Americanism on the rise in South Korea. The relationship between Washington and Seoul has declined considerably during the Bush Administration, with clear policy differences in their approaches to Korean reunification and the North Korean nuclear crisis. The deployment of South Korean troops to Iraq continues to be divisive and unpopular in South Korea, and South Korea’s attempt to link their support of the war in order to induce a more flexible Bush Administration posture toward North Korea clearly failed. Bush is widely unpopular in South Korea, as is the U.S. war on Iraq, and more South Koreans see the U.S. as a threat to their safety than they do North Korea. Passage of the FTA is no slam dunk, and no one should be surprised if it goes down to defeat. Should the FTA be enacted, the historical alliance between the U.S. and South Korea is likely to undergo further stress as anti-Americanism becomes tied not just to the Bush Administration policies in Iraq and toward North Korea, but also potentially to the negative consequences of an FTA that would significantly change the landscape—both literally and figuratively—of South Korea. Thomas P. Kim is the executive director of the Korea Policy Institute (KPI, online at kpolicy.org). KPI is an independent research and educational institute whose mission is to provide timely analysis of United States policies toward Korea and developments on the Korean peninsula in the interest of promoting friendship between the peoples of the U.S. and Korea. KPI was founded as a joint partnership between scholars and community activists who believe that “a reasonable U.S. policy towards Korea must be supportive of the legitimate desires of the Korean people for peace, sovereignty, reconciliation, and the reunification of Korea.” Kim is also an associate professor of politics & international relations at Scripps College.