Taking the Korea-US Free Trade Agreement (KORUS FTA) as a case study, I examine the influence of Korean big business in shaping Korea-US relations. For more than a half century, the ROK-US alliance has played a safety-pin role in preserving peace and stability on the Korean peninsula. However, the KORUS FTA has been a catalyst for building a new version of the alliance. While many studies on Korean foreign policy have centered solely on the roles of state actors, the democratization and pluralization of the foreign policy making process has made a multistakeholder model more relevant in explaining Korea's decisions. From that perspective, the article investigates the influence of big business in Korea on promoting the KORUS FTA and transforming the bilateral alliance. Based upon various internal and external policy networks, the major Korean business associations played advocacy and educational roles in advancing the new economic and security alliance with the United States. KEYWORDS: Korea-US relations, free trade agreement (FTA), ROK-US alliance, foreign policy making, multistakeholder model, business networks.
THIS ARTICLE EXAMINES THE INFLUENCE AND ROLE OF KOREAN BUSINESSES in shaping Korea-US relations, using the Korea-US Free TradeAgreement (KORUS FTA) as a case study. For over sixty years, the Republic of Korea (ROK)-US alliance has played a safety-pin role in preserving peace and stability on the Korean peninsula and in the Northeast Asian region. Based on common ideology and values, it also has functioned as an important institutional foundation for a strong bilateral economic and commercial relationship that underpinned mutual security and prosperity. Despite fluctuations in global security and economic conditions, the bilateral partnership has widened and deepened in all dimensions of interstate relations through the two countries' security, economic, and cultural ties.
The alliance has, however, been tested severely over the last decade. The United States has reassessed Korea's strategic value in the new century and has sought structural adjustments to the alliance. Similarly, responding to both domestic and external changes, Korea has sought a more equal relationship with its alliance partner. In particular, differences between the two countries over policy toward North Korea have highlighted their conflicting views.
A new version of the ROK-US alliance is currently in the making. The alleged main catalyst of its realignment to a higher level is the KORUS FTA. In one respect, the proposed FTAcould be an agent of momentum to transform the alliance from a solely military one into a more comprehensive alliance that has security and economic purposes. The high expectation of this strengthened military and economic cooperation is that it will serve as a much stronger basis for peace and prosperity in Northeast Asia in the future.1
With both countries making adjustments to the military alliance and their economic ties, one must inquire into the domestic roots of such a transformation of the bilateral relationship. More specifically, what roles did Korean big business play in the evolution of themilitaryeconomic alliance? The changing characteristics of the alliance are no doubt attributable to both international and domestic factors, on the one hand, and political and economic forces, on the other.2 However, singling out the key variables in explaining the emerging Korea- US relations is difficult.
Many studies on Korea's foreign policy in general and the Korea- US relationship in particular have become trapped in a so-called analytical double divide-between high and low politics, and between state and society as the key variables. Korea-US relations have been considered, for the most part, as high politics in which security and strategic concerns dominate the discourse, with the decisionmaking powers residing in state actors, primarily the top executives. Under the so-called imperial presidency thesis, presidents in general have had overwhelming authority in making foreign policy, leaving little room for low politics and societal actors to play an independent role. To that extent, the need for studying the role of societal forces has been relatively minimal.
However, such intellectual neglect is no longer valid as the Kim Dae-jung administration began to crack open the closed system of foreign policy making.More fundamental changes were made by the Roh Moo-hyun administration. Foreign policy has now often been at the center of public debate among Koreans-the examples of which include the conflict surrounding Korea's troop dispatch to Iraq, rearrangement of the ROK-US alliance, and the KORUS FTA. As a consequence, a multistakeholder approach becomes more relevant than in the past in explaining Korea's foreign-policy behavior toward the United States.
With the development of the KORUS FTA as a case study, I explore the Korean business stakeholders' transformative influence on the ROK-US alliance-a subject that most studies have largely missed. The main finding of this research is that since the 1987 democratization of Korean politics, the business community has increased its voice and influence on policy toward the United States, and contributed to strengthening the domestic support base for KORUS FTA negotiations, mainly through building internal and external advocacy networks.
One caveat, however, is in order. To fully understand the transformative dynamics of Korea-US relations, one needs to consider other factors such as the ideological orientation of top decisionmakers, and the specific capabilities of the FTAnegotiators. By aiming at building a multistakeholder model of foreign policy making, this article focuses on the business sector, one of society's most influential arenas. Hence, the next section of this article articulates a multistakeholder model of foreign policy making. The third section reviews the historical footprints of the Korean business sector's influence on the evolution of Korea-US relations, underscoring the historical affinity between the growth and interests of Korean businesses, on the one hand, and the ROK-US alliance as well as the government, on the other. Following that discussion, I sketch the background, process, and current status of the KORUS FTA and analyze the roles the Korean business community has played in moving the KORUS FTAforward, with a focus on the Federation of Korean Industry (FKI), a representative organization of business interests in the country. This includes inquiry into FKI's priority concerns and strategies to expand Korea-US business interests and involvement in the alliance. I then address the implications of Korean businesses' increasing influence on the deepening of Korea-US cooperation. The article concludes with a discussion of the potential benefits of the KORUS FTA in the bilateral, regional, and global contexts.
A Multistakeholder Model of Korea's Foreign Policy Making
Amultistakeholder model is a catchall expression with little conceptual precision. Originally derived from the corporate sector, it has been defined by its remarkable number of uses, such as multistakeholder processes, dialogue, diplomacy, and governance. In international relations, however, it has been dealt with either as a mode of global governance and international cooperation, or a mode of national diplomacy.As a form of transnational governance, the concept of multistakeholder cooperation has gained much significance in recent years. Multistakeholder global governance has often been associated with international regimes (Ruggie 1975), governance without government (Rosenau 1992), government as networks (Goldsmith and Eggers 2004), global public policy networks (Reinicke 1999/2000), global issue networks (Rischard 2002), and global action networks (Waddell and Khagram 2007).
As a model of diplomacy and foreign policy making, a multistakeholder approach is also different from a "club model."3 In the former, actors, including the traditional generators of diplomacy- namely states-are no longer able to achieve their objectives in isolation from one another. Increasingly, diplomacy becomes an activity concerned with the creation of networks embracing a range of state and nonstate actors in order to mobilize necessary support, knowledge, and other resources in which no single participant possesses a monopoly (Hocking 2006, 13).
According to John Ruggie's (2005) assessment, there is a traditionalist diplomatic culture in the United Nations that begins and ends with responsibility to the member states in relative secrecy and with minimal accountability. By contrast, a modernist culture rooted in transparency and engagement with a wide range of internal and external stakeholders also exists. The traditionalists, he argues, regard opaqueness and exclusiveness as a strategic asset, while for modernists transparency is the key to institutional success. However the contemporary context of diplomacy is characterized, Ruggie's two cultures coexist-an older, state-based form of diplomacy alongside an emergent form of multistakeholder diplomacy.
Actually, a multistakeholder model, in governance or diplomacy, lacks conceptual precision due to the numerous phrases used to represent it (e.g., public-private partnerships, multisectoral networks, multistakeholder arrangements, and public policy networks). Nonetheless, it is widely accepted that any multistakeholder model includes diverse types of actors ranging from states and international organizations to private companies and individuals (Scheftel 2009; Hemmati 2002; Martens 2007; Mikheyev 2005). Foreign policy is a functional representation of the political system in which it operates. In this respect, changes in Korea's foreign policy making are likely to coincide with shifts in the configuration of its domestic political system.
Traditionally, and in the pre-1987 era in particular, the Korean model of foreign policy making can be characterized as the club model. Foreign policy was the exclusive domain of the top executive or government officials-such as the foreign affairs, defense, trade, and other sectoral ministers-and was dominated by the supply-side actors through bureaucratic adaptation in the face of a changing external environment. In this system, executive-branch coordination has been undertaken within a top-down process.
But the club system has been undermined by the spread of democratic norms and a proliferation of nonstate agents such as business firms, business associations, labor unions, and nongovernmental organizations (NGOs).4 Since 1987, foreign policy making has been opened up to various domestic nonstate stakeholders. The multistakeholder model presupposes a democratization of the policymaking process as well as a pluralization of players seeking involvement. Even though the scope of discussion and the agenda of debates are defined by government officials, an increasingly large role is played by nonstate actors, including business and labor representatives. In particular, as globalization proceeds and the security-economy nexus strengthens, business becomes a necessary partner in dealing with complex foreign-policy issues, and sometimes private-sector advice mechanisms are formally overlain onto the policy process.5
Thus, a multistakeholder model of foreign policy is based on in- clusiveness and partnership rather than on exclusiveness in terms of the scope of policymakers. It tends to bring together major stakeholders in a new form of possible decisionmaking on a particular issue. Influence and the right to be heard should be based on the value of each stakeholder, but at the same time, it is inevitable that nonstate actors play a significant role (Hemmati 2002, 7).Whereas in the statist and club models, nonstate actors are largely viewed as consumers of foreign policy, in the multistakeholder model they can perform a more active role as producers of foreign-policy outcomes.
During the last decade, stakeholders in Korea's foreign policy making have been more diversified than ever, because-along with government agents-various private actors such as big businesses and labor organizations have had a larger say in foreign-policy issues. Among the prominent foreign-policy topics are those related to the ROK-US alliance and the KORUS FTA.With a focus on the roles of business associations in transforming Korea-US economic and security relations, this article presents evidence to support a multistakeholder hypothesis on foreign policy making in Korea.
Korean Business Sector and Korea-US Relations: A Historical Overview
The Security Dimension: The ROK-US Alliance
History reveals that the private sector's influence on the ROK-US alliance was, at best, marginal until the 1990s, and then became relatively striking in the 2000s. The geopolitics of the Cold War and inter-Korean division did not allow any governments and societal actors to seriously challenge the raison d'être of the alliance. Also, the Korean government had been a patron vis-à-vis the business community. The latter was simply a client whose life and death were heavily dependent upon the benefits provided by the military alliance and the Korean government as a patron, making supporting the alliance the default position of almost all the domestic stakeholders, including the business community. Furthermore, as far as the alliance was concerned, the government monopolized foreign policy making. However, in the new millennium, as the KORUS FTA signifies, the voice of business became more assertive in emphasizing the need for strengthening Korea-US cooperation.
The post-1945 evolution of Korea-US relations illustrates well the development of a unique interaction between the military alliance and economic cooperation. During the Cold War, close security cooperation actually led to intimate political relations between the two countries. The relative benefits of South Korea's military alliance were not confined solely to the area of security but extended to the economic realm. The bilateral ties between the United States and Korea represented a "patron-client relationship" in which the client received security assistance at the cost of political autonomy, and the patron supported the client's economy for military and ideological reasons.6
The patron-client relationship at the interstate level was exactly reproduced in the government-business relations of Korea. Very few Koreans had owned or managed large corporations when Korea was under Japanese colonial rule from 1910 to 1945. The birth of Korean capitalism was directly linked to the post-World War II military alliance between Korea and the United States-at least in the sense that it came into being under the shield of the US and Korean governments. After the departure of the Japanese in 1945, the US military authority allowed some Korean businessmen to obtain the assets of Japanese firms, many of which grew into the chaebol (business conglomerates) of the 1990s. Thus, in the 1950s and 1960s, Korean big businesses were one-way beneficiaries and hence important supporters of the ROK-US alliance.
Under the Park Chung Hee government, Korean big businesses received various fiscal and financial preferences and grew rapidly, such that the top thirty business conglomerates accounted for 35 percent of the total manufacturing shipments and 41.3 percent of total exports in 1985 (Jee 1997).With increasing market power, they began to have a greater say in the Korean political economy (Jones and Sakong 1980). The 1980s saw the previous patron-client relationships transform into symbiotic ones.After the democratic transition in 1987 and the subsequent collapse of the Soviet Union, state-society relations were realigned relatively in favor of societal actors.At the same time, low-politics issues such as economic cooperation with former communist countries and Korea-US trade friction emerged and became increasingly significant.
Nonetheless, the key locus of the foreign-policy-making process remained largely intact. In Korea-US relations, high politics dominated over low politics. Foreign policy making remained within the "secret garden" of the presidents, who were for the most part insulated from democratic control and public involvement (Jaung 2005, 51). No serious conflict of interests emerged between the government and societal actors about the indispensability of the alliance; the concerns of the Korea business community remained confined to the economic arena. In reality, the FKI, the umbrella interest group of large firms, showed little interest in foreign policy and even looked incompetent to push its agenda in the policymaking arena. The proportion of FKI's policy proposals with an international orientation was only 0.7 percent in the 1995-2000 years, although the overall rate of acceptance was as high as 70 percent (Choi 2005).
The 2002 presidential campaign saw Korea-US alliance issues suddenly become politically salient. In November 2002 a US military court found "not guilty" the US soldiers who had accidentally killed two Korean middle-school girls during an off-base training exercise in June of that year. The verdict triggered nationwide candlelight vigils against the seemingly irresponsible actions of both the US and Korean governments. Henceforth, the role of US troops stationed in Korea and the future of the ROK-US alliance became the most hotly debated issue during the campaign. The election marked the first democratic election in Korea in which foreign policy played a major role (Jaung 2005). Since the beginning of the Roh Moo-hyun administration in 2003, foreign-policy issues (e.g., the Korean troop dispatch to Iraq, the rearrangement of the ROK-US alliance, and the KORUS FTAnegotiations) have often been at the center of debate in Korea.
Today, domestic nonstate stakeholders are actively involved in foreign policy making. Particularly, Korea's big business has functioned as a stronghold of support for the ROK-US alliance. For example, in 2004, for the first time, Samsung Economic Research Institute (SERI) published a paper on ROK-US relations (SERI 2004).7 The gist of the report was that the then looming cracks of the alliance might have detrimental effects on the Korean economy, and that Korea should strengthen Korea-US security, economic, and social cooperation. The report emphasized that a free trade agreement be- tween the two nations would expand the previous security-oriented alliance into a more comprehensive framework of cooperation.As discussed below, Korean business groups have argued that the KORUS FTAwould strengthen Korea-US ties by transforming the military alliance into a military-economic alliance.
Economic Dimension: Korea-US FTA
The free trade agreement with the United States was also conceived from both economic and politico-military perspectives. The idea of a Korea-US FTA is traceable to the 1980s when Korean exporting companies' accessibility to North American markets was increasingly being squeezed by US trade laws and the conclusion of the Canada-US FTA. The Korean government was interested in a bilateral trade pact as a means to avoid further discrimination against Korean exports in the US market. However, US interests centered mainly on how an FTAcould open Korean markets more and be utilized to promote the multilateral round of trade liberalization at the General Agreement on Tariffs and Trade (GATT). The initial FTA talks failed to go beyond informal discussions, although a number of studies in both nations explored the potential economic and geopolitical implications of an FTA.8While these early attempts bore no fruit, interest in a bilateral pact was renewed in the late 1990s.
For Korea, the economic crisis in late 1997 forced a thorough review of Korea's development strategies. The government believed that new trade agreements could help make the Korean economy more efficient by infusing foreign capital, top-notch management skills, and new competition into the domestic market. A dramatic resurgence of bilateral trade deals in theAsia-Pacific region followed. Japan and Singapore began FTA talks in January 2001. Japan also held extensive consultations with Korea on the possibility of entering free-trade negotiations within a few years. Japan and Mexico examined the idea of bilateral talks and received support from a bilateral business working group. At the 2000 summit meeting of the Asia- Pacific Economic Cooperation (APEC) forum, Singapore agreed to launch FTA talks with Australia and the United States.
Despite the expected benefits and regional diffusion of FTAs, as of December 2000 the United States and Korea had not formally discussed the agenda. This time, the US business community in Korea promoted the idea of a bilateral FTA in a letter to US president Bill Clinton in June 1999 ("Letter from Jeffrey Jones, President of the American Chamber of Commerce in Korea, to US President Bill Clinton," 1999). Also, leading businesses in both Korea and the United States expressed their support for a potential Korea-US FTA ("14th Joint Steering Committee Meeting of the US-Korea Business Council" 2001). In addition, US senator Max Baucus, ranking minority member of the Senate Finance Committee, introduced a bill-the United States-Republic of Korea Free Trade Agreement Act of 1999-in November 1999 to authorize FTA negotiations with Korea as well as to fast-track procedures to implement the agreement.
For the United States, an FTA with Korea was expected to increase bilateral investment and agricultural and services exports to Korea. The United States might also use its expanded access to the Korean market as a foothold for influencing NortheastAsia's regional economy. Further, the Korea-US FTA could be a catalyst to jumpstart the next stage of regional free-trade movement withinAPEC, as well as be a building block to progress in the multilateral global trading system. Politically, the United States could benefit from a further strengthening of its security ties with Korea by sending a signal of a firm US commitment to a prosperous Korea and to maintaining stability in the Northeast Asian region.
Finally, in 2004, the Korean ministry of foreign affairs and trade (MOFAT) proposed a free-trade agreement to the US government. After clearing certain preconditions (i.e., rice, beef, and film screen quotas, and emission standards of imported cars), both governments announced the launch of the first official round of FTA negotiations on February 3, 2006. The KORUS FTAwas signed on June 30, 2007, but ratification of the agreement stalled when President George W. Bush's fast-track trade authority expired. In particular, a Democratcontrolled Congress opposed the treaty, expressing concerns over automobiles and US beef exports. For instance, President Barack Obama recalled that "the deal wasn't good enough for American workers" ("Remarks by the President at theAnnouncement of a US-Korea Free Trade Agreement," 2010).
Nearly three years after the signing, on June 26, 2010, President Obama and ROK president Lee Myung-bak agreed that they would direct their governments to resolve remaining obstacles to the agreement by November 2010.After intensive discussions, including at the November 2010 G-20 Seoul summit of the major economies, the two presidents announced on December 4, 2010, that a deal had been reached.9 On February 10, 2011, the United States and Korea exchanged the legal texts signed by US trade representative Ron Kirk and Korean trade minister Kim Jong-hoon, setting the stage for congressional consideration of the KORUS FTA.
The pending FTAis supposed to bring benefits to both sides. The view that Korea wants greater access to the world's richest market and that the FTA will help revive its economy is generally accepted in Korea. President Lee said in his national assembly address in July 2008 that the KORUS FTA "will boost the nation's economy." Korea's interest in better access to the US market was confirmed by Susan Schwab, US trade representative, who said that it would exchange much higher Korean barriers for access to the US market. Also, the United States would like to use the FTA to prevent its own exclusion fromAsia as a result of possibleAsian regional trade groupings. The FTA also provides the United States with a way to move Korea toward a more open economy and away from its past practices of discriminatory regulation and industry protection. The increasing importance of the G-20 framework offers Korea an opportunity to play a more significant role in international affairs. Korea's willingness to embrace this role provides another rationale for a stronger alliance with the United States.
Korean Businesses and the KORUS FTA
Sectoral Impact of the KORUS FTA
A trade pact has significant distributional implications in that it is likely to change the previous allocation of benefits and costs among domestic interests. The preferences of different domestic stakeholders in foreign economic policy making can be analyzed using Rogowski's (1989) commerce-and-coalitions model. The premise of this model is that economic cleavages between stakeholding constituen- cies are formed on the basis of their exposure to trade, which is assumed to have either beneficial or adverse effects upon them.
A number of studies have estimated the economic impact of a possible Korea-US FTA.10 For example, Wang and Cheong (1998) produced the first computable general equilibrium analysis in 1998. The Peterson Institute for International Economics and the US International Trade Commission also published a series of estimates for a Korea-US FTA (Choi and Schott 2001; Schott, Bradford, and Moll 2006; Schott 2010; US ITC 2001, 2007). Regardless of the models, base years, and liberalization scenarios, they all predicted that total US exports to Korea would increase by more than the total imports from Korea, in both percentage and value terms.
For Korea, the agricultural and service sectors are projected to be losers of the FTA deal, whereas manufacturing industries, with the exception of pharmaceuticals, are projected to be relatively immune to the negative effects of the FTA (see Table 1).11 According to the provisions on agricultural trade, Korea immediately would grant dutyfree status to almost two-thirds of current US agricultural exports. Tariffs and import quotas on most other agricultural goods would be phased out within ten years, with the remaining commodities and products subject to provisions that phase out such protection. Korea also agreed to eliminate its 40 percent tariff on beef muscle meats im- ported from the United States over a fifteen-year period, withholding the right to impose safeguard tariffs on a temporary basis in response to any potential surge in imports of US beef above specified levels.
For the United States, in the estimate of the American Farm Bureau Federation, the KORUS FTA, once fully implemented, could increase US farm exports to Korea by $1.6 billion. That may explain why more than forty US agricultural and food associations support the KORUS FTA (USTR 2008). On the contrary, Korea's farmers would be the biggest losers. Some experts estimated 1 million job losses in Korea's agricultural sector on account of the FTA.12
Trade in autos and auto parts proved to be among the most difficult issues for the FTA negotiators, pitting an increasingly competitive Korean industry seeking to increase its market share in the United States against US industries that want Korea to eliminate discriminatory policies and practices against US auto imports. Under the renegotiated agreement, the US car tariff-currently 2.5 percent-will be maintained until January 2016 and then be eliminated. In turn, for Korea, the 8 percent Korean car tariff will be reduced to 4 percent upon entry into force of the pact and then eliminated at the same time as the US car tariff. Additionally, rather than a ten-year tariff phaseout, tariffs on electric cars and plug-in hybrids will be phased out in five years. In addition, the US tariff on light trucks will be maintained until 2019 and then phased out over the next three years. Originally, the light truck tariff was to be phased out in ten equal annual increments. However, Korea did not slow its own tariff reform, meaning that the 10 percent Korean truck tariff will be eliminated upon entry into force of the agreement.
The KORUS FTA covers other areas as well. Most US-Korea trade in consumer and industrial products would become duty-free within three years after the agreement enters into force, and virtually all remaining tariffs would be lifted within ten years. The two countries agreed to liberalize trade in services by opening up their markets beyond what they have committed to do in the World Trade Organization (WTO).About 60 percent of US-Korea trade in textiles and apparel would become duty-free immediately, and the KORUS FTAwould provide a special safeguard mechanism to reduce the impact of textile and apparel import surges.
In sum, the expected winners of the KORUS FTA are the Korean producers of autos, textiles and clothing, and electronics, and the losers are the Korean farmers. This suggests thatmost Korean export-oriented businesses-especially the large multinational manufacturing firms- will benefit from and hence strongly support the KORUS FTA.
Roles of Korean Big Business
The main concerns of the Korean business community were whether an FTA would provide increased access to the US market and hence realize economies of scale. Up until the first half of the 2000s, Korean big business seemed very cautious about a free-trade deal with the United States. For example, LG Economic Research Institute (1998) concluded that a Korea-US FTAwould aggravate the current account deficits of Korea; the positive effect of improving the deficits was not as certain. The Samsung Economic Research Institute (SERI 2003) also pointed out in its FTA roadmap that the strongest candidates for FTApartners were Japan and China, and that an FTAwith the United States should be approached in a strategic manner and considered as a long-term project. In a similar vein, the Korea Economic Research Institute (KERI) published a policy brief that listed its own lineup of FTA candidates: Japan, Mexico, the ten-member Association of SoutheastAsian Nations (ASEAN), the BRIC countries (Brazil, Russia, India, and China), and then the United States, in that order (Kwon 2004). As can be seen, at the early stage Korean big business did not see the United States as a high-priority FTA partner.
Once FTAnegotiations between Korea and the United States were officially launched on February 3, 2006, however, Korea's big businesses took various and proactive steps to move negotiations forward. Table 2 shows two dimensions-key players and activities-in the pro- KORUS FTAmovement. Players include organizations and networks. Among the notable players were the five biggest business organizations: the Federation of Korean Industry (FKI), the Korea Chamber of Commerce and Industry (KORCHAM), the Korea Federation of Small and Medium Business (Kbiz), the Korea International Trade Association (KITA), and the Korea Employers Federation (KEF). Of the FTArelated networks, the KORUS FTAIndustryAlliance and the Korea-US Business Council played important roles in pro-FTAcampaigns either within Korea or in the bilateral relationship.13
Activities can be categorized as advocacy or education. According to Duverger (1972, 121-125), the modes of political participation are either direct or indirect. Direct participation is associated with policymaker- oriented and advocacy activities, whereas indirect participation is related to mass-level and educational activities.Advocacy is performed through both open and private channels that link business leaders to various decisionmakers such as government ministers, bureaucrats, legislators, and regulators. Their basic objective is to change the government's policy positions in accordance with business interests.Widely used methods of engaging policymakers are to organize meetings and to place policy inputs in the form of petitions, recommendations, and proposals. Educational activities are to widen the support base of the mass public, such as by holding public hearings, issuing statements, publishing reports, and sponsoring scholarly conferences.
The Roles of the FKI
The following analysis focuses on the advocacy and educational roles played by the FKI, which has been not only an umbrella organization of Korean business conglomerates, but also the focal point of pro- KORUS FTA movement networks, including the Industry Alliance and the Korea-US Business Council.14 Table 3 shows the FKI's pattern of political participation between 2003 and 2010. First, the portion of FKI's advocacy activities directly engaging policymakers has ranged from 17.39 percent (2008) to 31.25 percent (2010). The FKI's main focus has been overwhelmingly on the executive branch. The spotlight on the legislative branch was relatively weaker than that on the executive counterpart in that in the seven-year span from 2003 to 2010, only the years 2004 and 2009 recorded above 6 percent.
Not until 2003, when establishing the bilateral investment treaty/FTA Task Force within the Korea-US Business Council, did the FKI enter into the landscape of KORUS FTA politics in Korea. By signing a memorandum of understanding with the ministry of foreign affairs and trade (MOFAT) in March 18, 2003, the FKI opened an official channel through which its voice was transmitted into the foreign-economic-policy-making arena. In addition, the FKI onApril 23, 2004, established an internal agency, the committee on commerce and trade, in which MOFAT officials took part, that aimed at preparing business-level strategies to cope with international economic challenges. This group voiced the business circle's concerns at the stage of both negotiating an FTA deal and selecting an FTA partner country. Six months later, the committee called for a Korea-US FTA and became an important foundation for forming the KORUS FTA Industry Alliance in February 2006.
The KORUS FTA Industry Alliance was a domestic policy network in which government officials, corporate managers, and economists participated together.15 The alliance comprised forty-two groups, including the Korea International Trade Association and the FKI. The main purpose of the alliance was to promote the interests of Korean businesses. Its activities included reviewing major issues in FTAnegotiation groups examining possible countermeasures and responses by sector and by industry. It monitored developments in the negotiations and tried to reflect industrial opinions in the course of government negotiations. In addition, it exchanged information and opinions across industries to increase mutual understanding among sectors and among industries.
The FKI's important international network was the US-Korea Business Council. The council has been the premier business organization promoting the bilateral relationship between the United States and Korea. The council also serves as secretariat of the KORUS FTA Business Coalition, a broad-based group of over four hundred US businesses and associations that is working to secure congressional approval of the Korea-US FTA.
The origin of the US-Korea Business Council dates back to July 1986, when James M. Voss, chairman of the Caltex Corporation, and Dr. Nam Duck-woo, chairman of the Korea-US Economic Council (KUSEC), agreed to organize a joint conference of US and Korean business executives. One year later, the US-Korea Business Council was established to realize this vision. The two councils held their first joint steering committee meeting in March 1988 and their inaugural joint conference in October 1988 in Seoul. In 1999 the FKI assumed responsibility from KUSEC as the secretariat of the US-Korea Business Council, and was succeeded by the US Chamber of Commerce in 2002. The founding mission of the councils was to foster better business ties between the United States and Korea, and to promote the bilateral economic and political relationship in order to expand trade and investment between the two countries. Through dialogue, joint working groups, and other unilateral and joint initiatives, the councils have led efforts in both countries for the past twenty years to improve the bilateral trade and investment environment.
More importantly, the councils were early advocates for a USKorea free-trade agreement, first urging US and Korean government leaders in 2000 to consider entering into FTAnegotiations in order to further promote bilateral trade. The councils promoted the conclusion of bilateral investment treaty negotiations and led calls for the opening of bilateral FTAnegotiations (Joint Statement, the 13th Joint Conference of Korea-US/US-Korea Business Councils 2000). In January 2003 the council made a decision to establish a BIT/FTATask Force that would discuss possible solutions to the commercial tensions between Korea and the United States. In February 2006 it launched the US-Korea FTA Business Coalition in conjunction with the announcement by the US and Korean governments of their intention to enter into FTAtalks. The councils were also an important institutional linkage that lobbied both Korea's national assembly and the US Congress for early ratification of the trade pact, as reflected in Table 4.
Based on the above institutional foundations, Korean businesses persuaded the government to adopt twenty-seven out of fifty-one policy proposals concerning the Korea-US FTA negotiations (FKI Annual Report 2007). The focus of the pro-KORUS campaign was slightly different in the pre- and post-2007 periods. During the former period, it surveyed the interests of member firms and tried to project those interests into the negotiation process. In the latter period, however, efforts were made to shape opinion favorable to an early ratifi- Dr. Nam Duck-woo, chairman of the Korea-US Economic Council (KUSEC), agreed to organize a joint conference of US and Korean business executives. One year later, the US-Korea Business Council was established to realize this vision. The two councils held their first joint steering committee meeting in March 1988 and their inaugural joint conference in October 1988 in Seoul. In 1999 the FKI assumed responsibility from KUSEC as the secretariat of the US-Korea Business Council, and was succeeded by the US Chamber of Commerce in 2002. The founding mission of the councils was to foster better business ties between the United States and Korea, and to promote the bilateral economic and political relationship in order to expand trade and investment between the two countries. Through dialogue, joint working groups, and other unilateral and joint initiatives, the councils have led efforts in both countries for the past twenty years to improve the bilateral trade and investment environment. More importantly, the councils were early advocates for a USKorea free-trade agreement, first urging US and Korean government leaders in 2000 to consider entering into FTAnegotiations in order to further promote bilateral trade. The councils promoted the conclusion of bilateral investment treaty negotiations and led calls for the opening of bilateral FTAnegotiations (Joint Statement, the 13th Joint Conference of Korea-US/US-Korea Business Councils 2000). In January 2003 the council made a decision to establish a BIT/FTATask Force that would discuss possible solutions to the commercial tensions between Korea and the United States. In February 2006 it launched the US-Korea FTA Business Coalition in conjunction with the announcement by the US and Korean governments of their intention to enter into FTAtalks. The councils were also an important institutional linkage that lobbied both Korea's national assembly and the US Congress for early ratification of the trade pact, as reflected in Table 4. Based on the above institutional foundations, Korean businesses persuaded the government to adopt twenty-seven out of fifty-one policy proposals concerning the Korea-US FTA negotiations (FKI Annual Report 2007). The focus of the pro-KORUS campaign was slightly different in the pre- and post-2007 periods. During the former period, it surveyed the interests of member firms and tried to project those interests into the negotiation process. In the latter period, however, efforts were made to shape opinion favorable to an early ratifi- 488 Big Business and Korea-US Relations cation of the signed KORUS FTA. On the one hand, the FKI leadership, aligned with the chairmen of other large business associations, visited the national assembly and major political parties several times to lobby legislators (see Table 4). On the other, the FKI promulgated the joint statements of business associations, published op-ed articles, sponsored a couple of TV and newspaper commercials, and funded seminars and forums to emphasize the positive effects of the KORUS FTA in the areas of economy, politics, and security (FKI Annual Reports 2008 and 2009).
This article has examined how the previous club model of Korea's foreign policy making has evolved into a multistakeholder model. To highlight the influence of societal actors on foreign affairs toward the United States, I analyzed the roles and activities of Korean big business in shaping the military and economic relationships with the United States. Together with a historical overview of the relationship between Korean business sectors and Korea-US relations, I explored the political dynamics of the KORUS FTA as a test case. Our key finding was that the Korean government has been directly or indirectly exposed to pressure from business interests and engaged these interests more actively in formulating its policy toward the United States.
For more than a half century, the ROK-US alliance has played a safety-pin role in preserving peace and stability on the Korean peninsula and in Northeast Asia. However, the advent of anti-American sentiment in Korea over the last decade has tested the alliance. With the signing of a free-trade agreement, a new version of the ROK-US alliance is on the horizon. The KORUS FTA is expected to provide important momentum toward transforming the military alliance into a comprehensive one based on security, economic, and cultural ties between the two countries.
The existing dominant perspectives on Korea's foreign policy and Korea-US relations have emphasized the role of high politics and state actors, consequently missing the roles played by societal actors, in particular the business sector. To fill the void, I analyzed the influences of Korea's big business on the development of the ROK-US alliance and the KORUS FTA as well. Until the arrival of the new millennium, the ROK-US alliance had been untouchable in Korea; room for influence by societal actors including businesses was very limited at best. Particularly, Korea's chaebol benefited from Korea- US security cooperation as a client vis-à-vis their patrons, the Korean government and the United States, which together provided various kinds of economic assistance. Facing the challenges to, and skepticism about, the alliance in the first half of the 2000s, they became a more assertive supporter of the ROK-US alliance and initiated the KORUS FTA. For Korean big business, Korea's FTA and alliance with the United States are intertwined and mutually reinforcing, like two sides of the same coin. Kang Shin-ho, chairman of the FKI, has in fact said that the Korea-US FTAwill strengthen diplomatic and security relations between the two countries and have positive impacts on the peace of the Korean peninsula and maintenance of order in Northeast Asia, as well as enhance the nation's external credit rating (FKI, "Korea-US FTAShould Be Used as a Springboard for Take-off Toward Advanced Country," 2006).
Under the signed FTA, large Korean firms appear to be the winners and farmers the losers. To push their FTAagenda with both gov- finding was that the Korean government has been directly or indirectly exposed to pressure from business interests and engaged these interests more actively in formulating its policy toward the United States. For more than a half century, the ROK-US alliance has played a safety-pin role in preserving peace and stability on the Korean peninsula and in Northeast Asia. However, the advent of anti-American sentiment in Korea over the last decade has tested the alliance. With the signing of a free-trade agreement, a new version of the ROK-US alliance is on the horizon. The KORUS FTA is expected to provide important momentum toward transforming the military alliance into a comprehensive one based on security, economic, and cultural ties between the two countries. The existing dominant perspectives on Korea's foreign policy and Korea-US relations have emphasized the role of high politics and state actors, consequently missing the roles played by societal actors, in particular the business sector. To fill the void, I analyzed the influences of Korea's big business on the development of the ROK-US alliance and the KORUS FTA as well. Until the arrival of the new millennium, the ROK-US alliance had been untouchable in Korea; room for influence by societal actors including businesses was very limited at best. Particularly, Korea's chaebol benefited from Korea- US security cooperation as a client vis-à-vis their patrons, the Korean government and the United States, which together provided various kinds of economic assistance. Facing the challenges to, and skepticism about, the alliance in the first half of the 2000s, they became a more assertive supporter of the ROK-US alliance and initiated the KORUS FTA. For Korean big business, Korea's FTA and alliance with the United States are intertwined and mutually reinforcing, like two sides of the same coin. Kang Shin-ho, chairman of the FKI, has in fact said that the Korea-US FTAwill strengthen diplomatic and security relations between the two countries and have positive impacts on the peace of the Korean peninsula and maintenance of order in Northeast Asia, as well as enhance the nation's external credit rating (FKI, "Korea-US FTAShould Be Used as a Springboard for Take-off Toward Advanced Country," 2006). Under the signed FTA, large Korean firms appear to be the winners and farmers the losers. To push their FTAagenda with both gov- 490 Big Business and Korea-US Relations ernments, these firms made use of a variety of advocacy and educational initiatives. They also formed policy networks at both the domestic and international levels. The US-Korean Business Council and the FTA Industry Alliance monitored the government-level FTA negotiations, disseminated policy briefs and reports to inform the government officials, and mobilized domestic supporters through educational activities.
The KORUS FTA has huge implications for relations at the bilateral and regional levels. It also has important strategic and economic dimensions (Heo 2008). The KORUS FTAcould be a catalyst for deepening the security, commercial, and even cultural partnership between the two countries. In addition, it could act as a stepping-stone to inducing North Korea to integrate into the global community and thereby decrease geopolitical uncertainty on the peninsula. Also, given that Korea is regarded politically and economically as a "bridging" nation in East Asia, the KORUS FTA might not only accelerate movement toward EastAsian integration, but may also strengthen the stabilizing role played by the United States in the region.
1. Korea is the seventh-largest trading partner of the United States and among the largest markets for US agricultural products. The United States is Korea's third-largest trading partner, second-largest export market, thirdlargest source of imports, and second-largest supplier of foreign direct investment (FDI).
2. For an example of a study of the domestic determinants of foreign policy, see Allison (1989).
3. For a comparison of the club model and the multistakeholder model, see Hocking 2004, 12.
4. For a similar discussion of the international trade regime, see Keohane and Nye 2001.
5. For example, in the United States, thirty-three Industry Sectoral Advi- sory Committees were created in 1974, the purpose of which was to fairly represent key interests in trade negotiations (Hocking 2004).
6. On the argument that there is a positive relationship between a military alliance and trade cooperation, see Gowa and Mansfield 1993 and Gowa 1994.
7. The publication series was to examine the most outstanding political and economic issues for CEOs and policymakers.
8. The US International Trade Commission concluded in 1989 that a USKorea FTA was premature, citing possible negative political effects (Choi and Schott 2001).
9. Under the renegotiated trade pact, concessions were granted to the United States on trade in automobiles, tariff reductions for Korean automobiles were delayed for five years, and US autos were granted broader access to the Korean market.At the same time, the negotiators agreed to set aside disagreements over US beef exports for the time being.
10. For a comprehensive review of previous studies of a Korea-US FTA, see Kiyota and Stern 2007.
11. Under the new trade agreement, the United States agreed to extend the grace period of a pharmaceutical "patent linkage" system to three years instead of eighteen months, which may reduce the predicted losses of Korean companies by 110 billion won to 238.2 billion.
12. The new agreement says that the 25 percent Korean tariff on imports of a major category of US frozen pork will be phased out by January 2016 instead of January 2014.
13. The movement against the FTA deal was staged mainly by the "KoA" (Korea Alliance against the Korea-US FTA), which was another network.
14. FKI's membership increased from 13 companies at its inception in July 1961 to 486 companies in 2010.
15. It was renamed "FTAIndustryAlliance" to discuss the strategies for promoting the interests of Korean businesses in FTAs in general, including the KORUS FTA.
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Chi-Wook Kim is assistant professor at the University of Ulsan, Korea. Previously he worked for the Sejong Institute and the Asia-Pacific Research Institute at the Catholic University of Korea. His research interests include US foreign economic policy, the politics of international finance, middle-power diplomacy, and global governance. His current research focuses on transgovernmental networks, investment peace, and international regime complexity. His work has been published in various political science and international relations journals. He can be reached at email@example.com.