Category: Korea-Business

After the latest ban on US beef imports into Korea was announced this week Senator Ben Nelson had some strong things to say about South Korea:

“Of course, shipments intended for domestic use shouldn’t have been sent to Korea, and there was a mess-up in the U.S. Department of Agriculture that contributed to this mistake,” said Nelson, D-Neb., on Wednesday.

But Nelson categorized the shipments as a procedural problem, not a safety concern.

“Instead of just dealing with the one thing … nope, they shut it all down,” Nelson said. “They take every opportunity to shut off our beef, then they want a free Korean trade agreement.”

“It’s clear that the reaction by the South Korean government was far out of line with the problem. It indicates to me that they were probably looking for an excuse to stop imports,” Nelson said.

You don’t say. 

The Korean government will just continue to play this game as long as there are no consequences for it.  Everyone remember the Great Kimchi Crisis of 2005 between Korea and China?  During the crisis the Korean government tried to stop Chinese kimchi imports because they supposedly were tainted with lead.  The Chinese quickly responded by denying certain Korean imports in kind and suddenly the Great Kimchi Crisis was solved. 

This is the same kind of action that needs to be taken in regards to US beef.  Senator Nelson appears to finally be getting the US government moving in that direction:

Nelson said he planned to send a letter to Senate Finance Committee Chairman Max Baucus, D-Mont., asking him to withhold any committee action on a free trade agreement with South Korea until that country resumes American beef imports.

He also will be asking the U.S. trade representative to proceed against South Korea in the World Trade Organization for “their unfair treatment of U.S. beef.”

How about turning around the first ship full of Samsung Electronics products and see what happens?

The Chosun is not happy that members of the US Congress are trying to begin renegotiations of the recently signed Free Trade Agreement between Korea and America:

Two U.S. Congressmen — Charles Rangel, chairman of the House Ways and Means Committee, and Sander Levin, chairman of the trade subcommittee — have written to the U.S. Trade Representative (USTR) to call for renegotiations of the U.S. free trade agreement with Korea. The letter urges new talks with Korea on systematic barriers in automobiles, industrial products, agricultural and service markets.

This is the second time the U.S. has raised objections to the Korea-U.S. FTA, following a call for renegotiations on the environment and labor. These requests for renegotiations go against the general principles of negotiations and international norms.

Here is my favorite paragraph from the article:

The existing Korea-U.S. FTA was reached only after both sides took strenuous pains to find a balance between each other’s interests. Trying to unilaterally redesign the agreement to their advantage is tantamount to attempting to break the backbone of the trade pact. And the moment the U.S. shifts the burden of fresh negotiations onto Korea’s shoulders, the deal will go to pieces.

What I like about this paragraph is that it is quite ironic if you substitute Korea-US FTA in the paragraph with the US-ROK cost sharing agreement.  The US-ROK coast sharing agreement was reached late last year after long negotiations only to be unilaterally changed by the Korean government (see here & here) when they saw an opportunity to do so to their advantage when former Secretary of Defense Donald Rumsfeld was forced to resign. 

The FTA will not be renegotiated.  The two Congressmen in question are trying to score domestic political points with their constituencies in the US over the FTA, especially Senator Levin since he is from Michigan the home of the American auto industry.  They have to give an appearance of going down fighting against the Korea-US FTA in order to secure votes at home. 

With all this said I find it more than little ironic that the leading South Korean newspaper, the Chosun Ilbo is complaining about a couple of Democrat Congressmen playing domestic politics over the FTA and yet says nothing when the Korean government pulled one of the biggest back stabbings of the US in the history of the US-ROK alliance last December. 

Japanese motor companies overtook the United States in car sales last year:

Japan has regained its position as the world’s largest car producer after 13 years. China ranks third following the United States and outdistancing Germany. According to statistics for 2006 published by the Organisation Internationale des Constructeurs d’Automobiles on Monday, Japan overtook the U.S. by producing 11.48 million cars, up 6.3 percent from 2005 (10.8 million cars). Japan was the world’s top car-producing country from 1980 to 1993 but fell to second in 1994.

The U.S. slipped to second for the first time since 1994, producing 11.26 million vehicles. U.S. production decreased 5.7 percent from 2005 (11.95 million cars), registering a decrease for the fourth consecutive year. China produced 7.19 million cars in 2006, overtaking Germany, which manufactured 5.82 million cars, and becoming the world’s third-ranking car-producing nation. China’s production showed a sharp increase of 25.9% from 2005 (5.71 million cars). South Korea ranked fifth, producing 3.94 million cars, up 4.3 percent from 2005. France, the sixth-ranked country, made 3.17 million cars, down 10.7 percent from the previous year and lagging far behind South Korea.

Hopefully this will be a wake up call to the US automobile industry which appears to be poised to be by passed by China in coming years as well.  What is interesting is that China manufacturing abilities are being aided through industrial espionage being committed in Korea:

State prosecutors yesterday charged nine former and incumbent employees of Kia Motors Corp., the nation’s second-largest automaker, for leaking core manufacturing technologies to China.

The illegal transfer would cause trillions of won in loss to the domestic car industry, the Suwon District Prosecutors’ Office said.

Five of them were arrested and indicted in the first industrial espionage case involving the automotive industry in Korea. Four others were charged without detention.

They are suspected of colluding to leak confidential data on nine separate occasions from Kia to a Chinese company since November. They received a total of 230 million won ($248,620) in exchange for the data, the prosecution said.

It seems like everything is made in China now a days so why not our cars as well seems to be the trend.

With the threat of the cancellation of free trade talks hovering over the negotiators, each side was finally able to agree on an FTA that some are calling an FTA-lite.  Even as an FTA-lite, it is still the world’s largest bi-lateral Free Trade Agreement.  The Korea Times has a pretty good graphical run down of the FTA:

Notice in the agricultural sector the rice market was not opened so Korean consumers will continue to pay some of the world’s highest prices for rice.  The beef sector is supposed to be gradually opened over 15 years, but I wouldn’t be surprised if the Korean government keeps playing the mad cow disease game with US beef.  American fruits and vegetables are going to be allowed into Korea which should reduce prices for Korean consumers a bit on those products.  The Korean automobile and textile industries are going to greatly benefit this agreement.  The Korean steel sector is also going to greatly benefit. 

All in all to the casual observer like myself it appears the Koreans are getting more out of this agreement than the US with their manufacturing sectors receiving a big boost while Korean consumers will find lower prices in their supermarkets with US products.  However, I expect the usual suspects to claim that Korea is being economically colonized by the US and all the other usual nonsense that comes from the anti-US lobby in Korea.  . 

You would think the government would have more pressing things to work on then drafting robot ethics legislation:

South Korea is drafting an ethical charter to govern how robots will function alongside humans, officials said Wednesday.  The Ministry of Commerce, Industry and Energy said the government plans to issue a "Robot Ethics Charter" for manufacturers and users to cover the ethical standards that must be programmed into the machines.

"The government plans to set ethical guidelines concerning the roles and functions of robots as robots are expected to develop strong intelligence in the near future," the ministry said in a statement.

So what is driving this?  Well, I think Korean Information and Communications Minister, Park Hye-young, has the answer:

"Imagine if some people treat androids as if the machines were their wives. Others may get addicted to interacting with them just as many internet users get hooked to the cyberworld," she said.

I can imagine what kind of addictive interacting with them Ms. Park is talking about when I read "shocking" stories like this.

I posed the question earlier if the XK2 tank was next generation defense or a potential money maker? Well the answer to this question is emerging:

Turkey is considering purchasing South Korea’s new amphibious main battle tank unveiled last week for its next-generation tank procurement project, a military source said yesterday.

However, the Korean Main Battle Tank called XK2 is not the only option on the market. The French Army’s Leclerc is also a consideration, the source said on condition of anonymity.

“Chances are very high that South Korea could win the bid because Turkey’s Army and military officials trust our defense technologies more than those of France, the source was quoted as saying by the Yonhap News Agency in Seoul.

An official at the state-run Agency for the Defense Development (ADD), the main developer of the XK2, confirmed Seoul’s full-fledged efforts to export the tank to Turkey and other countries.

I would be surprised if the XK2 is not exported to Turkey because Turkey has already fielded the Korean K9 SPS system and France has been pushing to keep Turkey out of the European Union so why would they buy tanks from France?

HT: Commenter

It looks like Korea is serious about starting a space industry:

South Korea also plans to build a rocket launch pad on its own soil, though it will focus on uncrewed satellite launches. Hyundai Heavy Industries, the world’s largest shipbuilder, on Tuesday said it had won an order to build South Korea’s first space rocket launch pad.

The contract from the Korea Aerospace Research Institute calls for a launch platform and related facilities at the Naro Space Center on a southern island off the town of Goheung.

South Korea plans to launch a 100-kilogram (220 pound) satellite into orbit from Naro in October 2008. Construction of the space centre will be completed early in 2008.

Following completion of the project, South Korea will become the world’s ninth nation capable of launching a satellite with its own technology. So far it has relied on centres in other countries to send its satellites into orbit.

Financial terms were not given but Hyundai Heavy said it would build launch facilities, fuelling systems and a control room for the launch pad, which will be able to accommodate two rockets.

It will be interesting to see if Hyundai intends to develop this launch capability strictly for domestic Korean use or plan to expand it to compete for example against the Russians for launching international satellites.  It good to see Hyundai looking to the future and getting into the space industry.  I’ll really don’t see any reason why Korea couldn’t make quality rockets considering the technological capabilities of the country. 

Here is a map that shows the island where the launch pad at Goheung will be built:

Goheung is definitely a remote enough area of Korea to build a launch pad at.  It is actually one of the few areas of the country I haven’t been too.  Here is a satellite image of the island that will host the space center:

When this launch pad gets built I will have to get down there to see a launch some time. 

From the Washington Post:

Hyundai Motor Co., the world’s sixth-largest automaker, on Monday denied a British newspaper report that it is interested in acquiring Chrysler, the U.S. unit of German automaker DaimlerChrysler AG.

"We are not considering to buy Chrysler because our hands are full," Hyundai spokesman Jake Jang said, responding to a report in The Times that the South Korean automaker was among companies interested in bidding for the Chrysler Group.

The Times reported on its Web site that Hyundai was thought to be interested in joining possible bidders for the U.S. automaker, without citing specific sources. The paper said that Hyundai was believed to be interested in gaining access to Chrysler’s network of dealerships in the U.S.

Could you imagine 50 years ago if somebody said a South Korean company would be buying out a major US auto maker?  They would be laughed out of the building, so just the fact that Hyundai is contemplating buying a US auto maker is pretty amazing and another sign of how far Korea has come. 

The dispute between the US and Korea over the Korean rejection of US beef is beginning to heat up:

Korean and U.S. officials held two days of talks until Thursday over how to deal with bone fragments found in shipments of American beef imports. They ended without progress. U.S. beef imports to Korea resumed in October last year, but the first, second and third batches of beef, weighing 22.3 tons in total have either been returned to the U.S. or disposed of because 11 bone fragments, each the size of a fingernail, were found in the shipments. Korea is stressing an agreement with Washington that only beef and no bones can be imported to minimize the threat of mad cow disease. The U.S. is saying this policy is unrealistic and translates into a virtual ban on American beef imports.

The shipments contained bone fragments measuring 0.3×0.6 cm and only 1 mm in width, which are too small to be detected by x-ray. It is virtually impossible to get rid of such small bone fragments during the processing of beef. Since last July, Japan has allowed bone of this sort of size to be included in beef imports from the U.S.

It is very important to protect the Korean public from the threat of BSE. But most experts say it is going too far to halt the import of tons of beef due to a few tiny fragments of bone. Moreover, some quarters here are fanning anti-American sentiment by playing up fears that importing U.S. beef is tantamount to spreading mad cow disease.

It is clear that the Korean government is protecting their beef market from US beef.  They will continue to find any excuse they can to ban US beef.  That is why I like this idea:

That is why one U.S. senator is saying that all of America’s 700,000 imports of Hyundai cars should be thoroughly inspected and all of them sent back if a single defective part is found in even one of them. U.S. free trade negotiators have said there will be no deal unless the beef issue is resolved.

If Congress actually did something useful like pass legislation authorizing the return of Korean vehicles due to one defective part, US beef would be on sale in Korea by next week.  However, just like with the timing of the delay of the Camp Humphreys relocation, the Koreans are betting that the US Congress is too preoccupied with finding ways to lose the war in Iraq without being blamed, to give scant notice to this trade battle over US beef.  They are probably right. 

The recent dispute between the Korean and US governments has heated up recently as after beef fragments were found in the first shipments of US beef to Korea in three years.  The Koreans say that bone chips in US beef is a health concern because of the case of mad cow disease in one US dairy cow a few years ago.  The US government is claiming that the mad cow disease fears are just being used as a ploy to stop US beef from entering Korea and protecting the domestic Korean beef market from cheaper US beef.  One US governmental official has even gone as far to accuse the Korean government of planting the bone chips:

Park Hong-soo, minister of agriculture and forestry, has not made any particular comment on the beef import war between Seoul and Washington, in contrast to aggressive words by U.S. policymakers including Secretary of Agriculture Mike Johanns and Deputy Under Secretary Chuck Lambert.

Foreign media quoted Chuck Lambert, as saying, “The U.S. beef industry is suspicious about where the fragments came from. Some people have suggested DNA sampling or other means of trying to determine the origin of those bone chips.”

A U.S. agricultural news service reported that U.S. beef officials, in off-the-record comments, have intimated South Korea may have “planted” the bone fragments as an excuse to keep American beef out of the Korean market. An Australian broadcaster said Chuck Lambert is not ignoring the possibility that the shipments may have been tampered with.

Conveniently after the bone chips were found and disputed by the US government than the Koreans found dioxin poisoning in the beef.  Dioxin poisoning isn’t as ominous as the Korean government would lead you to believe.  The small trace amounts of dioxin come from the environment from cattle breathing in for example burned plastic or smoke from power plants and factories.  If you have ever smelled burned plastic guess what, you have dioxin in you.  The trace amounts are not enough to harm anyone, but the Korean government is going to use whatever they can to keep the domestic beef market closed to the US cattle industry. 

Now on the heels of this controversy the Korean government will not begin inspecting agricultural products bound for USFK commissaries in Korea:

South Korean officials and U.S. military personnel will carry out joint quarantine inspections of agricultural products brought into the country for the United States Forces Korea (USFK) starting in April, the government said Thursday.

The U.S. military is currently responsible for quarantine inspections of food imports for consumption by American soldiers stationed here.

The move, agreed upon at a Status of Forces Agreement (SOFA) meeting last week, will involve quarantine checks at the U.S. Army’s main garrison in Yongsan in Seoul as well as logistics support bases in the port of Busan and Gimpo near the capital, the Ministry of Agriculture and Forestry said.

"Inspecting agricultural products, even those set aside for U.S. soldiers, is important to prevent harmful pests from coming into the country and posing problems for the local ecosystem," said a ministry official.

I just have to wonder if this is at all related to the FTA and US beef rejections issues.  For decades the Korean government had no concerns about USFK agricultural products being inspected by USFK, but now all the sudden they want to inspect the products.  You can buy US beef in USFK commissaries that have bones in them.  These beef products are some of the most popular blackmarket items in the commissary.  Will these quarantine inspectors stop these beef shipments from being sold in the commissaries?  Will they find more dioxin poisoning?  I wouldn’t be surprised if they did.

This is all beginning to remind me of the camp pollution issue where the closed out USFK camps are so polluted that the Korean government cannot take them back because of public health concerns and demand that USFK pay to clean up the camps.  Of course this whole issue is a fraud just like the US beef issue because the closed out US camps in their respective cities are a virtual oasis of green in the middle of densely populated and overly polluted urban cities.  Enough of an oasis in fact that many of these camp are being looked at to be turned into public parks, yet they are so polluted it is a public health issue despite decades of US soldiers including myself living on these camps and never having adverse health effects.

Now we are to believe that the food especially the beef that US soldiers eat in Korea is infected with mad cow disease and dioxin poisoning and just like the closed out camps, is a public health issue thus the general Korean public needs to be protected from it.  If I am to believe the Korean government, I must currently be infected with mad cow disease and dioxin poisoning from US beef plus whatever else they find from these agricultural inspections, in addition to being exposed to radiation poisoning from living for years on USFK camps in Korea and not believe that both of these issues are nothing more than Korean demagoguery being used for political and economic advantage against the United States.