Political leadership and trade policymaking

Introduction

Does political leadership matter in FTA politics? While the institutions of trade policymaking provide the context that make high- or low-level FTAs more or less likely, political leadership determines the timing and political momentum for FTA negotiations. Political leaders in Japan and Korea have also contributed to introducing changes in the domestic trade governance of their countries. Korea’s cohesive domestic trade governance emerged in 1998 under the leadership of President Kim Dae-jung (1998—2002). Strong FTA leadership in subsequent administrations reinforced Korea’s cohesive domestic trade governance to enable Korea to pursue high-level FTAs until 2012. Ironically, political leadership has also played a key role in undermining Korea’s cohesive domestic trade governance since 2013. In Japan, Prime Minister Shinzo Abe is responsible for Japan’s shift to more cohesive domestic trade governance since 2013, which has allowed Japan to engage in mega FTAs such as the TPP. In both countries, strong political leadership in FTA policies has entailed major institutional changes in the trade policymaking system, the weakening of political opponents, and the overcoming of opposition from protectionist sectoral interests. The following sections trace the respective role of Japan and Korea’s political leadership in shaping their countries FTA policies since the late 1990s.

Korea 2003–2012: strong political leadership in FTAs

From 2003 to 2012, Korea emerged as a front-runner of the FTA race in Asia due to the combined efforts of two different governments with opposite political orientations. Specifically, President Koh Moo-hyun’s left-wing administration (2003-2007) and President Lee Myung-bak’s right-wing administration (2008-2012) were critical in advancing Korea’s FTAs. Under the leadership of these two ideologically opposed presidents, Korea achieved the feat of successfully concluding the KORUS FTA, which is Korea’s largest FTA to date and the most controversial. In this one decade, Korea negotiated FTAs with the U.S. and the EU, the two largest economies in the world. These two trade partners were also the most politically difficult to negotiate an FTA with due to their large agricultural export sectors. Korea increased the coverage of economies under its sphere of FTA network, thereby improving trading opportunities for Korean businesses and expanding Korean consumer choices.

Prior to 2003, political leaders have had a difficult time pushing forward FTAs against strong public outcry to agricultural liberalization. President Kim Dae-jung (1998-2002) initially opened the opportunity to have stronger political leadership on FTA policymaking through the creation of MOFAT in 1998 (see Chapter 3). Although President Kim succeeded in centralizing the authority over trade policy-making, he could not drive trade liberalization. As a left-wing opposition candidate, President Kim had won the presidential election in the middle of the Asian Financial Crisis. The sense of urgency created by the unprecedented financial crisis pushed the left-wing President Kim to move out of his political comfort zone to embrace trade liberalization. However, he could not move far beyond the constraints of his power base, which was built around small- and medium-sized enterprises, farmers, workers, and left-wing media, intellectuals, and civic groups. For example, it took President Kim’s entire presidency to conclude Korea’s very first FTA negotiation with Chile, a rather small trading partner, due to persistent and consolidated demonstrations by farmers and left-wing NGOs (Choi 2005a). More importantly, President Kim’s attempt to negotiate the Bilateral Investment Treaty with the U.S. faced stonewalling opposition from the film sector, ultimately resulting in failure. Korea had a screen quota, which required the mandatory screening of Korean local films for 144 days or 40 percent of the year. The Bilateral Investment Treaty meant the abolishment or significant reduction of the screen quota, to which the Korean film sector vehemently opposed (Choi 2005b). Ultimately, what President Kim achieved by the end of his presidency was just one FTA with Chile.

Progressive president Roh Moo-hyun’s administration (2003–2007)

The biggest moment of Korean FTA policy came when Korea decided to launch an FTA with the U.S. In the “New Year Address to the Nation” in January 2006, President Koh Moo-hyun proclaimed:

Market opening is an irreversible trend. We should take this trend as an opportunity to advance our economy.... For the future of the Korean economy, we should enter into a Free Trade Agreement with the U.S. As soon as agenda is set, we will launch the negotiations.

(Roh 2006)

President Koh’s decision to start the KORUS FTA is shocking when considering his ideological orientations and core constituents. President Roh not only shared the same constituents as his predecessor, but he was more radically left in his ideological orientation. During his election campaign, he had positioned himself as anti-American and anti-establishment. His enthusiastic supporters such as left-wing labor unions (e.g., Korean Confederation of Trade Unions) and teacher’s unions (Korean Teachers and Education Workers Union) viewed the U.S. as the emblem of evil. Many of President Roh’s core supporters demanded the withdrawal of U.S. troops in Korea. In their eyes, the American soldiers, not the North Korean ones, caused tension and threatened peace in the Korean peninsula. In their minds, Hollywood was the symbol of American imperialism. The fight to defend the Korean film industry was, hence, a heroic battle to preserve cultural identity against Americanization. And their ardent support was instrumental to his successful presidential election in 2002 (Choi 2006,44-52).

In his first year in office, the U.S. continued to press for reductions in the screen quota. President Roh asked his administration to come up with options to resolve the differences between the two countries. The whole year was consumed with the screen quota controversy. The film sector successfully mobilized against any reduction of the quota (Choi 2005b). On the other hand, the voice supporting the reduction of the screen quota was virtually inaudible (ibid.). Although a sizable share of the public seemed to favor reducing the screen quota to improve the consumers’ right to choose, they stayed silent (ibid.). In 2003, President Roh did not adopt a strong position on the screen quota issue but chose to observe the unfolding debate. However, in 2006, President Roh openly supported reducing the screen quota. What was more striking was the way in which the reduction was made.The Korean government agreed to cut the screen quota into half as a condition for launching the KORUS FTA talks (Kim 2010, 270; Choi 2006, 86-90). The film sector was taken by complete surprise.

From the moment the government announced the launching of the KORUS FTA negotiations talks in February 2006, the entire nation erupted in opposition rallies from left-wing groups. Gathered under the coalition title “National Front Against KORUS”, these opposition groups organized daily rallies decrying the KORUS FTA. The National Front Against KORUS even sent organized groups of demonstrators to KORUS negotiation venues in the U.S. When the KORUS FTA negotiations were held in Korea, the National Front Against KORUS formed a human wall in front of the venue to block the movement of negotiators (see Chapter 5 for details on anti-KORUS FTA social mobilization). Left-wing media reported on the negative side effects of the KORUS FTA and the devastating consequences of NAFTA on Mexico and Canada (Choi 2006,139-159).¹ In sum, President Roh had become a traitor to his own power base and faced formidable political opposition from his own supporters.

President Roh also faced opposition to the KORUS from within his ruling party. Several politicians with leadership position in the ruling party denounced the idea of the KORUS FTA as a neoliberal agenda, which would wreak havoc on the economically disadvantaged. Some senior-level staffs, who had worked for President Roh in his first year in office, were also critical of the KORUS FTA. What they had in common were their anti-neoliberal and anti-American ideological positions. Faced with party rebellion and the impossibility of communicating his rationale for the KORUS FTA to the opposition, President Roh decided to empower the supporters of the KORUS FTA. In August 2006, President Roh established a high-level committee named the KORUS Facilitation Committee. The committee consisted of seven ministers and six top leaders from business associations, media, and civic groups. Han Duk-soo, the former Deputy Prime Minister until the mid-2006 and a well-known neoliberal technocrat, was appointed to chair the committee. The objective of the committee was to demonstrate the Korean government’s strong resolve for the KORUS FTA through propaganda and cooperation with the private sector. President Roh also gave his unwavering support to his negotiators and encouraged them to push forward with the national interest in mind.

On the negotiation front, one of the most contentious issue was the import of U.S. beef. The Korean government had agreed to resume the import of U.S. beef, which had been prohibited in the wake of the mad cow disease outbreak in December 2003 (Jurenas and Manyin 2010). Specifically, the exact words of the negotiation was that the Korean government would agree to import “de-boned skeletal muscle meats of cow under 30 months” (Choi 2016b, 185). The Korean inspection authority interpreted this language as “bone-free”. When the first shipment of U.S. beef arrived in Korea after the lifting of the ban, the Korean MOA inspected all boxes of U.S. beef. After finding a few boxes of beef with bones, all the other boxes without bones were rejected. The second and the third shipments of U.S. beef met the same fate (Kim and Hong 2006). The U.S was furious about the Korean governments rejection of even boneless beef. The Korean and U.S. trade negotiators could not make any advances on the beef issue even though the deadline was approaching. On March 2007, President Roh called U.S. President George Bush and reassured that Korea would open the beef market at a reasonable level, pursuant to the recommendations of the World Organization for Animal Health (OIE) (Kim 2010,202-206).²

When Korea and the U.S. clinched the deal in April 2,2007, President Roh stated in a televised speech that he had personally promised President Bush to ‘“uphold the recommendations’ of the World Health Organization (OIE)...and ‘open the Korean [beef] market at a reasonable level’” (Jurenas and Manyin 2010, 4). A month later, OIE found U.S. beef to be a “‘controlled risk’ country for the spread of mad cow disease”, thus giving it tradable status (ibid.). Based on this development, the U.S. demanded that Korea change its inspection condition so that all cuts of boneless and bone-in U.S. beef, irrespective of age, can be imported. This issue, however, was not resolved at the end of President Roh’s presidency.

Although President Roh did not succeed in completely resolving the U.S. beef import issue, the KORUS FTA would not have made so much progress without his visionary and bold leadership. The KORUS FTA is a prima facie neoliberal right-wing agenda that was adopted by a left-wing president. Considering the sharp ideological fault line and partisan politics in Korea, such an action was nothing short of miracle. Despite the enormous political burden, President Koh was determined to make the KORUS FTA happen (Kim 2010, 92—93, 103). Unlike the previous President Kim, President Roh gave his trust to his trade negotiators even on politically sensitive issues, and if necessary, intervened to clear the path for troubled negotiations. As president, he prioritized his national vision and dared to move beyond his power base for the greater national interest. The critical difference between the two left-wing presidents from 1997 to 2007 was whether or not they stayed within the constraints of their power base.