THE BROOKINGS INSTITUTION 2011 SEOUL-WASHINGTON FORUM: EXPANDING COOPERATION BEYOND FREE TRADE AND THE SIX-PARTY TALKS

Transcription

1 KOREA-2011/06/13 1 THE BROOKINGS INSTITUTION 2011 SEOUL-WASHINGTON FORUM: EXPANDING COOPERATION BEYOND FREE TRADE AND THE SIX-PARTY TALKS Washington, D.C. Monday, June 13, 2011 PARTICIPANTS: Opening Remarks: RICHARD BUSH Senior Fellow and Director, Center for Northeast Asian Policy Studies The Brookings Institution YOUNGHEE HAHN Executive Vice President The Korea Foundation Keynote Remarks: JIN HA HWANG Member National Assembly of the Republic of Korea * * * * * ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

2 KOREA-2011/06/13 2 P R O C E E D I N G S MR. BUSH: Ambassador Hahn, Assemblyman Hwang, Assemblywoman Sung, distinguished guests, ladies and gentlemen, it's my great pleasure to open the fifth session of the Seoul-Washington forum. I'm Richard Bush; I'm the director for the Center for Northeast Asian Policy Studies here at the Brookings Institution. And it's our great honor to collaborate with the Korea Foundation on this important forum. I would particularly like to welcome all the members of the Korean delegation who came across the Pacific to attend the fifth session. We're particularly pleased to have Assemblyman Hwang, who will speak to us in just a minute on strategic views of the ROK-U.S. alliance. We're also very pleased to have the participation of a number of American specialists who are too many to mention. As I said, we're very pleased to continue our important collaboration with the Korea Foundation. And this is the fifth session. It's interesting to see how the issues that we have discussed over the last five sessions have evolved from a focus not just on the bilateral, but also to the regional and global. Not only is this the 5th iteration of the Seoul-Washington forum, it also happens to be the 20th anniversary of the Korea Foundation. Korea Foundation, as many of you know, is a major force in applying Korea's soft power around the world, enhancing knowledge about Korea, and the world would be a different place without it. From policy forums like this one to student exchanges to cultural exchanges, the Korea Foundation is currently making its mark and enhancing the reputation of the Republic of Korea. And so, it's my great pleasure to welcome and introduce the executive vice president of the Korea Foundation, Hahn Younghee, for a few remarks. MR. HAHN: Dr. Richard Bush, the honorable Mr. Hwang Jin Ha, the ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

3 KOREA-2011/06/13 3 honorable Madam (inaudible 00:03:21), His Excellency Ambassador (inaudible 00:03:28), distinguished guests, ladies and gentlemen. It is my great honor to be in this distinguished company today representing the Korea Foundation, and to welcome all of you to this fifth Seoul-Washington forum. The Korea Foundation has been hosting a series of bilateral and regional forums every year. And this Seoul-Washington forum certainly is one of the most prominent of those. Over the years, the Seoul-Washington forum has served as a crucial venue for leading experts and policymakers from both countries to discuss important issues of mutual interest in an open and frank manner. I believe that this forum has contributed a lot to strengthening intellectual networks and communication channels between our two countries. For this fifth Seoul-Washington forum, we set several agendas of mutual interest and concern for in-depth discussion and exchange of views. In the security level, we all know that South-North Korea relations have been relatively strained due to North Korea's nuclear ventures, as well as a series of military provocations including, of course, the sinking of the Cheonan warship and the artillery shelling of Yeonpyeong Island last year. Despite North Korea's continual provocations, South Korea has been genuinely committed to securing peace on the Korean Peninsula, utilizing all viable deployment means. Without close collaboration between Korea and the United States, it would not be possible for us to get out of this stalemate on the Korean Peninsula. In this light, I believe the Seoul-Washington forum should be a venue for drawing collective and common wisdom from the experts of both sides. We also have important issues related to the Korea-United States free trade agreement. Given the fact that the United States is Korea's fourth largest, while ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

4 KOREA-2011/06/13 4 Korea is the United States' seventh largest trading partner, there is no doubt that both countries stand to gain from the free trade agreement. Although we have yet to overcome the last-minute political hurdles for this eventual ratification and implementation, I am confident that Korea-United States free trade agreement will get on track as we all clearly see its benefits in our two countries. So, I expect to watch this forum engaged in delving into the issues of post-korea-united States free trade agreement, as well as the more imminent political hurdles. I have no doubt that this year's forum will also be another important contribution to the strategic partnership of our two countries. And taking this opportunity, I would also like to thank the Brookings Institution and commend their good work in organizing this forum. Together with all of you gathered here today, I look forward to the lively and the fruitful discussions that I know we will have here. Thank you. (Applause) MR. BUSH: It is now my great honor to introduce our keynote speaker, Assemblyman Hwang Jin Ha of the ROK's National Assembly. Assemblyman Hwang represents the city of Paju in Qyeonggi Province. He's a second-term member. Prior to that, he served 39 years in Korea's armed forces, rising to the rank of lieutenant general. Assemblyman Hwang serves on the foreign affairs, trade, and unification committee of the National Assembly, and he's vice chairman of the intelligence committee. In his grand national party, he has been responsible for coordinating national policies with the government in fields of foreign affairs, national security, unification, and intelligence. General Hwang will speak on strategic views of the ROK-U.S. alliance. Please join me in welcoming him. (Applause) MR. HWANG: Thank you, Dr. Richard Bush, for your kind introduction. And I prepared a script for presentation. And I will give you a reading -- my script for you ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

5 KOREA-2011/06/13 5 all. Good afternoon. Dear director, all of Center for Northeast Asian Policy Studies of the Brookings Institution, Richard Bush. Executive vice president of the Korean Foundation, Ambassador Hahn Younghee, distinguished Korea and U.S. participants of fifth Seoul-Washington forum, and guests. It is my great pleasure and honor to be invited to the fifth Seoul- Washington forum and have a chance to deliver the keynote speech. I am currently serving at the committee of foreign affairs, trade, and unification at the National Assembly of the Republic of Korea. Taking this opportunity, I would like to sincerely appreciate the Brookings Institution and the Korea Foundation for organizing this meaningful and timely forum. Today, I will discuss -- and I will focus my remarks on reviewing the past and present of ROK and U.S. alliance, which has sustained for more than half a century, after the ROK and U.S. Mutual Defense Treaty in I will then propose goals of a future-oriented global alliance and what to do for attaining these goals. I characterize the ROK-U.S. alliance as a blood alliance, under which we fought shoulder to shoulder in major wars such as the Korean War, the Vietnam War, the Gulf War, the Iraq War, and the Afghanistan War. A glorious alliance which we must take pride in for its remarkable contributions to the stability and peace of the Korean Peninsula, and the region. A hope alliance which we are transforming for promoting global peace and prosperity. In this respect, I first would like to introduce what we have achieved through successful development and the sustainment of the ROK-U.S. alliance of more than half a century. Among many successful outcomes of the ROK and U.S. alliance, three main attainments are, first, the ROK and U.S. alliance has successfully achieved ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

6 KOREA-2011/06/13 6 the stability of North Asia region, and preventing a war from occurring on the Korean Peninsula. Although North Korea has conducted military provocations more than 2,500 times on South Korea since the Armistice Agreement in 1953, Korea and the United States have maintained peace and stability over the peninsula by successfully managing and overcoming these provocations with an unprecedented bilateral combined defense posture. Second, the ROK and U.S. military alliance achieved two miracles, such as a remarkable economic growth and the political democracy of Korea today, which was completely turned into ruins because of the Korean War. Korea's pro-capita GDP has increased to over $20,000 from $67 in the 1950s. Now, Korea ranks number 15 in the world by nominal GDP. Korea's free democracy is a role model for undemocratic and democratizing countries in the world. The Economic Intelligence Unit released its 2010 edition of the Democracy Index Survey, which it ranks Korea as number 1 in Asia and number 20 in the world. Third, Korea and the United States have achieved a most successful alliance despite many challenges which were overcome owing to mutual understanding and trust between the two nations. This successful alliance gives the two nations great pride and confidence, and the conviction of a form and solid alliance. Our close partnership of such a short period of half a century has evolved into a bilateral, regional, and, finally, global alliance. Which is, I believe, an unprecedented and remarkable history in the world. With bearing in mind that these achievements, it is very crucial for us to assess the current situation surrounding the ROK-U.S. alliance when considering the ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

7 KOREA-2011/06/13 7 future shape of alliances. We are required to pay special attention to unchanged conditions which, I think, are to be overcome. And these conditions should be considered as core issues for resolving problems on the Korean Peninsula which, I believe, lead the future development of ROK's Korea-U.S. alliance. First, the Korean Peninsula remains divided. There has been no change at all since the Armistice Agreement in Despite strenuous efforts for securing a peace treaty to supercede the Armistice Agreement, it comes to see that our efforts would not bring about any improvements or progress unless North Korea changes itself. It's neither a goal nor a solution that the division of the Korean Peninsula becomes permanent. Second. Military and non-military threat posed by North Korea is still present and imminent. And further, it escalates the level of its threats. North Korea's unification strategy for communizing South Korea and building a socialist state in the south still remains the same in the North Korean constitution, and the work of parties' bylaws. In addition, North Korea reinforced a family-based power succession system, even tougher. Since the end of the Korean War in 1953, North Korea has continued the provocations on South Korea. And the recent provocations such as a plan to torpedo attack on South Korean naval vessels and artillery attack Yeonpyeong in 2010 were an uncontroversial act of war. Which is by no means acceptable to the international community. North Korea's current threat is a core cause of destabilizing the peace and security on the Korean Peninsula, the region, and the world. I strongly believe that North Korea would not abandon its plans and programs of building up its conventional and non-conventional military capabilities, developing nuclear weapons, and the ballistic ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

8 KOREA-2011/06/13 8 missile, and the uranium enrichment activities on these -- attaining these strategy goals. Third, it becomes much clearer to us that the stability on the Korean Peninsula has been a lynchpin for regional stability and peace. In the past, before the outbreak of the Korean War, the Korean Peninsula has been invaded from outsiders more than 930 times. So, the peninsula was key ground of a power struggle among regional powers. A Cold War remnant division of the peninsula and North Korea's constant provocations are the most serious destabilizing factor to the security environment of Asia, and the world. Thus, in the past and the present, the stability of the Korean Peninsula is a crucial determinant of regional peace and stability. These are unchanged elements which are still threatening us and, on the other hand, adversities to be overcome. And we need to look at changed elements owing to our mutual efforts and successful alliance, and newly emerging powers in the region. First, North Korea's national -- excuse me. First, Korea's national capability and the international status are remarkably changing. Korea currently ranks 15th in the world by nominal GDP. In terms of political development, Korea is illustrated is one of the most successful democratized countries. Korea is now very actively and pro-actively participating in international communities. As you all are aware, Korea successfully hosted the G-20 summit last November, and will host the Nuclear Summit next year. The Korean government prioritizes a national goal of increasing international contributions to the (inaudible) community. These contributions include increasing official development, assistance, ODA, expending, keeping operations, transferring and sharing economic development experiences, and knowledge, and others. ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

9 KOREA-2011/06/13 9 Second, power and the center of international politics shifted to Asia from the West. We are saying that the 21st Century is the Asia and Pacific era. Asian Development Bank, ADB, released its report, Asia 2050: Realizing the Asian Century, last May and speculates that if Asian countries -- the current trends of economic growth, Asia would occupy more than 50 percent of world GDP, trade, and investment by In political areas, Asian countries make strenuous efforts to overcome their differences and promoting political integration through diverse functions of regional government and non-government organizations. Third, the rise of China is a formidable element to be strategically considered. It is not doubtful that the rise of China is the most significant change of the international politics in the 21st Century. Owing to efficient economic growth, China replaced Japan as the number 2 economy in In terms of politics, recent patters of foreign policy are uncovered as an aggressive stance on international issues directly related to China's national interest. As a regional and global power, China spurs military modernization and development of high tech military weapons. Although the size of China's annual military expenditure, now number two in the world, is nearly one-fourth of the U.S. military budget, China has maintained a double-digit increase of its military budget since the mid-1990s. It is commonly understood that China will stick to strengthening its national power and expanding fear of influence in dealing with international issues. Distinguished ladies and gentlemen. Now it's our responsibility to further develop our alliance partnership in a strategic context of the said unchanged and changed elements. And we have to pass down a successful partnership to a following generation. In this respect, I would like to stress a few issues in need of a new perspective and bold action for creating a successful future-oriented global alliance. ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

10 KOREA-2011/06/13 10 First, I'd like to emphasize ROK and U.S. alliance should be even further developed as a more comprehensive one. Through ratification of current FTA and implementation of this trade agreement, to be more comprehensive relationship between Korea and the United States. Secondly, the issues on the current peninsula are no longer dependent variables on U.S., Asia, and global strategy, but should be considered as independent variables on designing U.S. strategy. Korea is a core country with Japan and China for U.S. strategic context in the region. As I explained before, during more than 5,000 years, it should be remembered that when peace and stability on the Korean Peninsula, the region was stable and peaceful. Third. It should be (inaudible) that our mutual relationship is dependent on one party's decision. I am confident that making decisions through closed consultation and wide support from the public will make better balanced decisions for doing better our job. We have experienced recent difficulties, and never forget the lessons given. The fourth. The ROK and the U.S. government must work together to demonstrate a strategic synergy of the alliance. Finding a way of integrating each country's different capabilities and strengths lead us to increase the roles and the responsibilities of the alliance at the global community. We are well aware of the strengths and the weaknesses of our nations. I believe that when merging our strengths, we gain more strength and overcome our difficulties. Ladies and gentlemen, we have a strong will and obvious goal for the future of the ROK and U.S. alliance. The joint vision signed in June 2009 by President Barack Obama and President Lee Myung-bak clearly stated our strong will and obvious goals. Although I do not interest details of the joint vision here, our fundamental will and ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

11 KOREA-2011/06/13 11 goals are primarily contributing to peace and security for the Korean Peninsula, promoting and strengthening our partnership for a peaceful reunification of the divided South and North, and with a solid foundation of respecting and pursuing common values of free democracy and market economy. The ROK and U.S. alliance must move toward promoting and increasing its responsibilities and roles for global peace and prosperity. Distinguished guests, there are ,000 U.S. servicemen and women currently serving together shoulder to shoulder with Koreans for the defense of Korea. All of them shout out in chorus, let's go together. And we have our precious assets to keep and develop. More than 2 million Korean Americans living in the United States, more than 1.5 visitors traveling every year between the 2 nations. And we have more and more precious assets of sustaining the ROK and U.S. alliance and its future development. me. Let's go together. Together with them and you here, I would like to shout out. Join me, join Thank you very much for your attention. (Applause) MR. BUSH: Assemblyman Hwang has agreed to take a couple of questions. This is your chance to ask a question of someone who is obviously a deep and thoughtful expert on these issues. stand up? comprehensive speech. Chris, please. Chris Nelson. Okay, yeah. Speak louder. Why don't you MR. NELSON: Okay. Is there a microphone? MR. BUSH: Here comes a mic. The mic is coming. MR. NELSON: Thank you so much, Assemblyman, for a very What is your sense of how the politics of this is going to play out next ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

12 KOREA-2011/06/13 12 year with your election process coming up? Is there a risk or a danger that there will be increasing criticism of both the Lee Administration and the United States for what some on the more liberal side see as a refusal to try to engage the North Koreans because we see an advance of their conditions are not acceptable? Do you see there's some risk of that? And what is your response to people who urge that? Thank you. MR. HWANG: As Korean incumbent government, Lee Myung-bak clearly mentioned that we are ready and we are always preparing any candid dialogue with the North. But as we had in several very kind of tragic instances in the past, even further, we don't -- as we don't find any kind of positive progress in the North in terms of stability and security of the Korean Peninsula. We are asking them genuinely as kind of objectives to dismantle their nuclear ambition, and also provocative activities to the South, which destabilize the stability of the region. Regrettably, they don't express any further that kind of positive progress. And so we are working very closely together with China and also our allied country, the United States, together to persuade North Korea to be positive -- change their position. But, as you mentioned, they are continuing the criticism of the opposition party members and the other organizations in the South who have, you know, very strong kind of -- supporting North Korea's policy or instigated groups in the South who are criticizing civilly about Lee Myung-bak's administration as too much hawkish. But, you know, we are thinking from the public support we are taking two tracks. The first one, continually persuading North Korea to be positively changing their attitude. And secondly, we are keeping blunt security readiness, together with combined forces in Korea. ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

13 KOREA-2011/06/13 13 MR. BUSH: Thank you. Richard Shin. MR. SHIN: Hi, Richard Chin with the Economists Incorporated. I have a question about the -- I mean, you already mentioned that North Korea's nuclear weapons destabilize the region. And you're also trying this policy of making them into a nonnuclear country. But we know it has failed, and we know it's not going to happen any time soon. Maybe it's time for a radical change in policy? Rather than South Korea always taking the hit from North Korea, maybe it's time that South Korea may want to get nuclear weapons of its own, and maybe that will create a more counterbalancing -- maybe even a stabilizing effect in the region. Did you have any thoughts about that and would you comment on that? MR. HWANG: As you are fully aware, Korea is keeping as a democratic country. So there can be many opinions. Somebody wants to have our own nuclear capability; the other one wants to have relocation of the -- some tactical nuclear capability in Korean Peninsula. And thirdly, about to take the extended nuclear umbrella. Those kind of opinions are coming together. But the decision is, our government's position, is to maintain nuclear umbrella based over the nuclear security. And so, there can be many, many opinions to be raised. But the final decisions we are keeping is, extend the nuclear umbrella as our policy. Thanks. the Washington D.C. area. MR. BUSH: One more question? Right here. Right there, stop. MR. CHER: My name is Hi So Cher. I'm just a, you know, consultant in I have a question just, you know, from your comments on the, you know, inauguration or, you know, the era, the period of Asia, you know, by Considering, ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

14 KOREA-2011/06/13 14 you know, that context here in the United States, there are some arguments whether U.S. is, you know, downside, you know, decline. Or still U.S. is, you know, the only powerful nation in the world. And just, you know, I want to have your advice what's the weakness of the United States. Just, you know, vis a vis Asia. Like countries China, or Korea, or Japan. And what kind of role that Korea can play in complimenting such, you know, down trend degradation, as you mentioned. Just, you know, when you talk about inauguration of the Asian era. Coupled with this question, I want to ask you the domestic Korean politics. I think, you know, the struggle in the history just, you know, as we know -- you know, the era of Asia means it's a competition -- you know, regional competition. But in Korea, there is, you know, competition between South and North, which is, you know, peninsular conflict. But there are also, you know, South-South or even within the domestic politics there are very severe, you know, struggle. And what do you think about, you know, the end or the status of the struggle in South Korean politics? And thinking about the transparency which is demanded a lot in the, you know -- even the U.S. course, FTA, or a lot of transactions. Please explain to us your insights about that matter. Thank you. MR. HWANG: First question, what do you think -- what I think about the vulnerability or weakness point of the United States. I think the United States is actually keeping the superpower in the world, but there are some changing partners there. Increasingly, experiencing some kind of difficulties to fully arrange international leadership. My point is that so far, in terms of international order, we were used to kind of Western-focused, Westernized international order. But after the Vietnam War or ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

15 KOREA-2011/06/13 15 after the Korean War, there was slowly, slowly change to international order as kind of -- in terms of content or in terms of the meaning of how to arrange international order. While it was spreading and expanding international in the community, the culture itself became more plural or diverse, kind of the contents to maintain the international order. So that's why U.S. is experiencing not simply economic power or military power, but those kind of newly introduced kind of concepts of contents to arrange international order -- U.S. is facing that kind of difficulty. I'm not sure. That's my opinion. And so in that regard, as we are -- as I mentioned already how to arrange emerging China. I think as an Oriental country and as we are keeping -- historically and philosophically, religiously, as an Oriental country, in some respects we can compliment the U.S. as -- it will be difficult to mention them as a weak point. But I think we can compliment to meet international challenges toward free democracy and the open market system, so on and so on. And second question, domestic politics related to neighboring countries and Asian countries. We understand we are still a developing country. Not fully developed or a developed country already. And so we do our best, not simply in South Korea alone. But we understand how difficult it would be -- but a peacefully united Korea will make a little further as kind of strengthened -- as kind of a unified Korea. It will take time, but we'll do our best. And also, we are doing best to collectively and to work very closely together with my neighboring countries like China, Japan, and even Russia. And so our continued effort in two tracks, North and South. Kind of the development and the improvement of our relationship in-between two countries, North and South. And improving our relationship and working together with our neighboring countries -- major powers. MR. BUSH: Assemblyman Hwang, I think your remarks have given us ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

16 KOREA-2011/06/13 16 an excellent start for our Seoul-Washington forum. And I would like to thank you very much. Thank you. (Applause) MR. HWANG: My pleasure. * * * * * ANDERSON COURT REPORTING 706 Duke Street, Suite 100 Alexandria, VA Phone (703) Fax (703)

17 THE BROOKINGS INSTITUTION 2011 SEOUL-WASHINGTON FORUM: EXPANDING COOPERATION BEYOND FREE TRADE AND THE SIX-PARTY TALKS Washington, D.C. Monday, June 13, 2011 PARTICIPANTS: Panelists: HYUN CHONG KIM President and Chief Legal Officer Samsung Electronics CHAESUNG CHUN Professor, Department of International Relations Seoul National University BALBINA HWANG Visiting Professor Georgetown University ROBERT SUTTER Professor of Practice in International Affairs The George Washington University * * * * *

18 P R O C E E D I N G S MR. BUSH: If I could ask the members of the panel to come up to the stage, we'll move right into that discussion. Thank you. For those of you sitting in the back, there are some spaces up here. They say reserved, but they re not reserved anymore. Feel free to come and get a good seat. Thank you very much. The theme of the Seoul-Washington Forum for 2011 is beyond KORUS FTA and the six-party talks, ROK-U.S. cooperation, and the new architecture of complex networks in East Asia. That s quite a mouthful. And to discuss these themes, we have an outstanding panel of scholars and executives from the Republic of Korea and from the United States. You have their bios with you, so there s no need for me to give long introductions. It s much more important to hear their presentations. And for our first presentation, it s my pleasure to welcome Dr. Hyun Chong Kim, who s the president and chief legal officer of Samsung Electronics. Mr. Kim, thank you very much. MR. KIM: Thank you, Richard, for that generous introduction. I must say in my capacity as the chief legal officer of Samsung Electronics, I do come to Washington quite frequently -- several dozens of times -- and normally it has to do with patent litigation. And I m glad that I can come to Washington and not have to deal with patents. So, obviously, I won t be discussing our patent litigation matters with you today. Whenever the KORUS FTA subject matter comes up, I must confess it almost sounds like a course in ancient history. I recall first discussing this with then- USTR Bob Zoellick, and then launching it with then-ustr Rob Portman, and then negotiating and concluding it in 2007 with Susan Schwab. So today, although it may sound a little bit historical, I am going to be discussing why Korea decided on this multidirectional KORUS Free Trade Agreement. And I will be also discussing why it was necessary to embark on this route, the expected benefits, and the strategic trade policy

19 and considerations, including ratification of the KORUS FTA and where it currently stands at the National Assembly. Let me first start with the why at that point in time, going back to 2004, it was necessary for us to seriously consider this Free Trade Agreement program. When I was working at the WTO back in the early 2000s, I detected that there was a division between the developing and developed countries. The organization was simply not ready for another round of multilateral trade discussions. Up to that point in time, Korea was very, very loyal and faithful to the multilateral round of negotiations, and we were, indeed, really a late arrival to the Free Trade Agreement scene. But we worked really hard on it and during my tenure as the trade minister, we were able to launch, negotiate, and conclude Free Trade Agreements with more than 45 countries. One of the reasons that the DDA multilateral round was not progressing was the huge discrepancy in interest between the developing and developed countries. Obviously, the developed countries wanted to have the developing countries lower their tariff rates significantly, and the developing countries were reluctant to do that. Just to give you one example: Suppose there is a concession rate of 30 percent on a product matter and the developing country applies a 15 percent applied rate and the DDA cost for a 50 percent reduction, the question becomes 50 percent based on what? Fifty percent based on concession rate or 50 percent based on applied rate? So if you do the 50 percent reduction based on the concession rate, in effect there s no reduction. It s a paper cut. So issues such as this, as trivial as they may sound, were something that most countries just could not agree on. With respect to the Free Trade Agreement, it s bilateral in nature. It s not multilateral. It gave Korea the freedom to select its partners and more importantly, it also gave Korea the ability to control the extent of liberalization and the pace of the liberalization. For a country that depended percent of Korea s GDP is dependent upon foreign trade, and there was a need to supplement the multilateral round of discussions with bilateral Free Trade Agreements. And moreover, when you look at the

20 statistics, you will note that the amount of trade between signatories of Free Trade Agreements was on a rapid incline, taking out more than 50 percent of the global trade. At that point in time when I looked at -- in my capacity as the trade minister, when I looked at the landscape that appeared before us, the socioeconomic landscape, there were definitely obstacles that we had to overcome. For example, many of the OECD countries that have achieved the growth of per capita income of 10,000 and jumped to 20,000, they did it in less than 10 years. For example, Singapore and Hong Kong did it in 4, Japan 6, Denmark 7, U.K. and Spain in 9, and the United States took 10 years. Korea, on the other hand, when we first crossed the 10,000 per capita income threshold in 1995, but remained below that 20,000 threshold even as recently as The youth unemployment rate was very high, 8.5 percent, but if you include the underemployment, the number exceeded 1 million. The lack of job prospects and unemployment contributed to another factor, and that was the low birth rate. In 2004 as I recall, the birth rate was something like 1.08, and that was far below the world average of 2.55 and the average for OECD, which was 2.1. Not only that, but our population was aging quite rapidly. When I say aging, I m talking about 7 percent of the population over the age of 65, and an aged society is 14 percent over the age of 65. Now, France took 115 years and Sweden took 85 and U.S. took 71 years to achieve that aged society, and we were about to become that by the year We also found ourselves in a fairly uncomfortable position of being sandwiched between Japan and Korea when it came to technology. According to our National Science and Technology Commission -- they conducted a study in and according to those stats, Korea trails the U.S. by some 5.4 years and Japan by some 3.8 years, and we are only ahead of China by 2.5 years. Speaking of China, of course, the stats are fairly impressive. Our some 20,000 Korean corporations have invested $32 billion in China for the last 10 years, and we currently incur approximately $125 million of trade surplus per day. So in 24 hours,

21 we re making $125 million vis-à-vis the Chinese. China now, of course, built the fastest supercomputer. And I would not be surprised, in light of China s proactive trade policy -- provided that, of course, Korea-China Free Trade Agreement talks do not progress rapidly -- I would not be surprised if they came back and said, listen, that s the way China, Taiwan, Hong Kong, Macau, ASEAN, and Korea regional trade agreements. One of the -- after the Free Trade Agreement was signed and concluded back in 2007, one of the most frequently asked questions was how did you ever convince President Rowe to engage in a Free Trade Agreement with the United States? And quite honestly the answer to that question was he didn t really need persuasion. In Korea, I think, to be the president of Korea, you need to be intimately familiar with three subject matters. First, you have to be intimately familiar with the policies pertaining to, in detail, the United States, North Korea, and liberalization. President Roh was a realist. He was not an ideologue. And without liberalization, he knew that there was no way to become a developed nation. He also recognized -- he was fully cognizant of the fact that failure to liberalize historically meant catastrophe for the country. He indicated, for example, events leading up to the Sino-Japanese War of 1894, the Russo-Japanese War of 1905, and the eventual annexation of Korea by Japan, all these issues he realized were partially contributable to the fact that we failed to liberalize at that given moment. And he also recognized that in East Asia, historically it has not been a horizontal relationship. It was more of a vertical relationship. And this was why it was important for Korea to adopt global standards and just to give you a few examples. In the World Baseball Classic, the Korean baseball team once suffered a humiliating defeat to the Taiwanese national team. And after analyzing it, we realized there were three faults: the Korean Baseball Organization used smaller baseballs so it allowed the pitchers to throw forkballs a lot easier, the mound was a few inches higher, and the strike zone was larger. Well, we fixed that and that s why we won the gold medal in the Beijing Olympics.

22 I can tell you that back in 1996, when we said we were going to liberalize the retail sector, everyone said that all the Korean retail stores would go bankrupt. And when we did the Open Skies in well, more specifically, that was Ambassador Lee Tae Sik in his capacity as the director-general of the Trade Bureau -- when we did the Open Sky, of course, Korean Air Lines and Asiana came to us and said, we re just not going to be able to compete with the likes of United and American. But what happened was that in the retail sector, for example, you have the retail giants such as E-Mart, Lotte, and Home Plus that have done incredibly well not just in Korea, but outside of Korea, including China. In the Open Skies, for instance, the air route between Korea and the United States, the Korean companies now occupy 93 percent of the air passenger market and 64 percent of the air cargo market, and that s on the Korea-U.S. route. I must say one of the issues that I never quite understood about U.S. consumers was why they put up with the type of services currently being provided by some of these U.S. airlines. I wish somebody would sue them. Let me briefly touch upon the benefits to the consumers. I think there is this faulty notion, almost a misconception or perception, that it s the manufacturers in Korea or the farmers in the United States or the service providers are the clear beneficiaries to free trade. That may be partially true, but the real beneficiary, I think, is consumers. At the end of the day, it s the consumers that win out as a result of increased selection, increased competition, and inexpensive commodities that become available in the market. I can tell you that sometimes I go shopping with my wife, and the inflation and the high price of goods is just really amazing. For example, we have -- our consumers consume the most expensive beef, which is about $43.70 per kilogram, which is about 2.2 pounds. We also consume the second-most expensive potatoes and thirdmost expensive apples. So free trade will allow, by actually allowing inexpensive products to be available in the market, it will allow our consumers to benefit. And quite honestly, one of the regrets that I have about the Korea-ASEAN Free Trade Agreement,

23 which I negotiated, was that what we should have done was we should have probably allowed for an immediate elimination of tariffs on tropical fruits. Criticisms about the KORUS FTA abound, and the most vociferous criticism is aimed at the indirect expropriation provision. What this means -- it s a very technical, legalese thing -- what this means is that indirect expropriation takes place where an action by the U.S. and Korean government has in effect an equivalent of direct expropriation without the form of transfer of the title or outright confiscation. Now, of course, FTA is criticized because it codifies the compensation for indirect expropriation. But I can tell you that almost all the Free Trade Agreements and the bilateral investment treaties that we have signed contain this provision. Korean courts also award compensation if the economic impact of a government action amounts to an indirect expropriation. And moreover -- and I think this is the most important component -- the agreement clearly states that nondiscriminatory regular actions that are designed to protect legitimate public welfare objectives, such as public health and safety and environment, do not constitute indirect expropriation. So I don t think there s a problem on that front. Rich, how am I doing on time? MR. BUSH: You re doing great -- MR. KIM: I ll speak faster. MR. BUSH: -- if you re about to wind up. MR. KIM: I m about to wind up. So it was against this backdrop, it was against this landscape that Korea decided to launch multiple FTAs on multiple fronts with multiple parties. We, of course, started with Canada and then Bob Zoellick sort of wanted to engage in preliminary negotiations, which eventually led to the launching and the conclusion of the Free Trade Agreement with the United States. To the south, ASEAN being our fifth largest trading partner, we finished the ASEAN Free Trade Agreement and to the west, including China. I think that s why -- I think we re the only country that calls China a Western nation accordingly. But to the

24 west, we finished our Free Trade Agreement and ratified the Free Trade Agreement with the 27 member states of the EU, and that s now our second-largest trading partner, which will probably be highly beneficial for both parties. And to the north, of course, we sort of did a -- we re engaged in preliminary discussions with Russia because they haven t joined the WTO yet. And currently we are negotiating a Free Trade Agreement with China. Where does this KORUS FTA stand today? As I stated at the outset, it s been four years since we signed this agreement. I think it should be ratified. There are some critics at home in Korea who point out that the renegotiation or the further negotiation basically disturbs the equilibrium that was achieved between the two parties back in But when you look at the agreement in the macro framework, the relative advantage that Korea can derive from vis-à-vis other countries that export the same products to the U.S. market, namely China and Japan, when you take that into account, I think it makes perfect sense to have this ratified. My speculation is that once the U.S. Congress ratifies this sometime in the late summer or early fall, the Korean National Assembly should follow. And for the U.S., of course, the KORUS FTA represents the largest Free Trade Agreement it has executed since NAFTA. And it also means increased exports, especially in the agriculture sector, and job creation. I m going to skip that part in the interest of time. Back then -- obviously because I know that the press is here today, also, but I do want to carefully say that back then, after concluding the Free Trade Agreement with the U.S., I suggested to the President when he was about to take his trip to Pyongyang that we do a North-South Korea Free Trade Agreement. Of course, this was contingent upon -- today it would be contingent upon cessation of hostilities and an improved environment, but back then there were certain considerations, including taking advantage of the natural resources, which is valued at some 6.5 trillion U.S. dollars. Just as a reference, Germany spent for the last 20 years $2 trillion on its reunification costs.

25 Finally, I think for Korea the KORUS is a less negotiating Free Trade Agreement with the U.S. It was a process, it was not an end. It was not an objective, per se. It was a process and from that process, we learned a unique set of -- we gained a unique set of know-how, which takes us to the next level of development. And finally, I think our companies, our private sector, need to probably engage in -- they must be left alone. They have to be allowed to engage in free activities, and retain and increase their competitive advantage acquired through real and substantive experiences. Thank you for listening, and I appreciate your attention. MR. BUSH: Thank you, President Kim. That was a great presentation. We move now from economics to security, and our speaker is Professor Chaesung Chun who s in the Department of International relations at Seoul National University. Professor Chun. MR. CHUN: The subject today for me is security. There is a lot of discussion going on about South Korea s kind of medium-term or long-term security strategy after the 40 years of Cold War experiences and 20 years of post-cold War experiences. So the subject today for me is South Korea s future foreign policy with regard to East Asian security architecture and future regional order. Recently in South Korea, there is a growing emphasis on the need to develop the so-called complex diplomacy, meaning that we aim not only at South Korea s survival and prosperity, but at contributing to the transformation of East Asian order from a competitive balance of power system to more cooperative network governance. So evading seething rivalries among great powers surrounding the Korean Peninsula, especially between the United States and China, South Korea tries to follow the paradigm of middle-power diplomacy, which is sustainable through the changes of administrations and by cohesive social support. So this is the contents. The visions for long-term vision for South Korea s foreign policy: As you know, it s surrounded by four global and regional great powers. It is still a relatively weak country. Based on the strengthened and transformed

26 ROK-U.S. Alliance, South Korea has strived to guarantee survival in socioeconomic and cultural development. With this most vital interest, South Korea will begin to put modest efforts to help transform competitive regional order, more regional security mechanism which focuses on the survival of each country. So in contrast to weak powers foreign policy so far, a middle power can help reduce the regional tension, suggest concrete measures to assuage rivalry among great powers, and provide new mechanisms for dispute settlement. A growing capability of South Korea in economic and social cultural areas is a very promising element. And what is promising in global and regional policy in these days is the advance of new power fields composed of soft power and network power. There are very fast transformations in international relations in the 21st century. Based on globalization, democratization, and the development of information technology, the logic of traditional balance of power, especially the balance of hard power, goes with that of softer network power. So it s a good thing for me the power such as South Korea, which lacks sufficient hard power to form regional order. It can help great powers and regional institutions to devise better regional environments by enhancing its knowledge power and positional power. So for the next decade, there will be a great deal of continuity in South Korea s foreign policy. They will pursue the value of democracy, market economy, and so on, and the ROK-U.S. Alliance, all these things. What is characteristic, though, in its complex diplomacies is its effort to transform the current regional security architecture. So there could be some reasons for stability by balance. There are many reasons, but among many. Why we East Asians stick to the balance of power still is a little bit of a theoretical term, but it s the coexistence of incomplete modern transition, modernity, and reinforcing postmodern or transition toward network governance, which means that if we deal with the Northeast Asian or East Asian security architecture, we have to deal with all the extra burdens. The current balance of power system and the upcoming and new global trends, the regional trends, which is very new. So what we want to do is to deal

27 with all these different logics of international relations at the same time and try to transform the basic structure of the East Asian security architecture. So the visions are in the slides. I will skip that in the interest of time. But there are challenges, several things. In the next decade there will be continuity, I think. So there will be a structural imperative for the cooperation among the great powers like the U.S. and China as we saw in mid-january this year. But still there are many problems, especially for the United States, still the sole global leadership such as the Middle East situation, increasing Russian influence, economic difficulties, and the rise of new powers. And still there is a possibility of sour relations among great powers in the region. And especially for South Korea, the possibility, even though it s very weak, of the rivalry between the United States and China is a big factor of worry for South Korea in the next decade. As we witnessed in 2010, last year, many issues can be easily escalated to the strategic level when lacking such as trust between them. So this possibility poses serious challenges to South Korea. So what we have to do as a middle power is to try to enhance mutual trust, if possible, among the great powers in the region. Also, the future road of China s development is very hard to predict. We know all the uncertainties with regard to the rise of China in an economic and military sense. I ll skip the details. Also there are conflicts in East Asia about heraldry, history education, and all the nationalist issues. They are all deeply rooted in the history, the East Asian modern transition imperialism. It s a kind of memory politics, identity politics. So even though, for example, we have a growing strategic interest within South Korea and Japan, but it s very hard to pursue that because we have many historical issues. So how to cultivate all these new grounds for strategic cooperation in many issues in the future will be another challenge. How to deal with North Korea, it s a big challenge. I will skip that, but there is an idea of the so-called North Korea policy of co-evolution, meaning that North Korea should evolve itself towards a more normalized country with the help of also-