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KORUS FTA: A Strategic Opportunity for Bipartisanship

by Scott A. Snyder
February 16, 2010

In an interview with Bloomberg Business Week last Thursday, President Obama stated that he would like to complete pending trade agreements with South Korea, Colombia, and Panama, but there’s a catch. Although his State of the Union Address provided a potentially powerful strategic rationale for passing these free trade agreements (FTAs) as part of the administration’s effort to double exports over the next five years, the president’s statement in his interview with Bloomberg was actually a step backwards. By adding that “with respect to South Korea, there is some concern that, although the deal was good for our telecommunications and our finance system, that our auto exports to South Korea are still subjected to a lot of nontariff barriers,” the president offered a tactical explanation why his administration has chosen NOT to move forward with the agreement rather than making strategic arguments for why the Korea-U.S. (KORUS) FTA is in the national interest.

The president could have mentioned that Korea has also signed an FTA with the EU, which, if ratified prior to the KORUS FTA, will actually put U.S. firms at a disadvantage vis-à-vis European competitors in the Korean market. Or he could have mentioned that Japan, China, and South Korea are discussing the possibility of a regional FTA, which would in effect form an Asian trade bloc, to the exclusion of the United States, and that KORUS could help mitigate the effects of such a development. Or he could have said that China has used preferential trading arrangements as a means by which to promote itself as the center for economic growth (in the post-Google U.S.-China relationship, the need for collaboration with Asian partners is even more important), but the KORUS FTA would set a benchmark for trade liberalization in Asia that would keep the United States in the game as part of the economically most vibrant region in the world. Or he could have mentioned that failure to pass the KORUS FTA (especially in advance of the president’s visit to Seoul for the G-20 this November) would constitute a setback to the comprehensive strategic alliance with South Korea announced in a U.S.-ROK Joint Vision Statement at the White House in June of 2009. Evan Feigenbaum and Bob Manning mention the KORUS FTA as one of the types of engagement needed to sustain American credibility and influence in Asia.

Instead, the president gently reminded us in last week’s Business Week interview that there is formidable political opposition from labor unions and some portions of the auto sector, a core Democratic constituency that would prefer not to see these FTAs forwarded to Capitol Hill. Given the complexity of health care, climate change, and all the other issues on the president’s congressional agenda, it is understandable that the administration might hesitate to tell the South Korean side what problems it needs to address in the automobile provisions of the FTA. After all, the FTA will only pass Congress if the White House shows political leadership.

Consideration of the FTAs should not be a solely Democratic game. The president has tied jobs directly to increased exports, and Korea happens to be one country where labor costs and rules make off-shoring prohibitive; in fact, a KORUS FTA might possibly result in increased Korean investment in the United States.  If Republicans truly want to show that they are not reflexively opposing the president, and are open to the president’s calls for bipartisanship, they should show a willingness to take up FTAs as a starting point for cooperation.

Post a Comment 3 Comments

  • Posted by JHB

    If the USG really wants to iron out the auto-trade issue in the KORUS FTA, as Obama suggested, why hasn’t it approached the Koreans? What is the administration waiting for?

  • Posted by Park Beeler

    Now that the administrations obsession with Healthcare, to exclusion of virtually all other national priorities, has seemingly run its course, the priority of the moment for the U.S. is, theoretically (and as repeatedly stated by POTUS in the State of the Union address) J O B S! Large South Korean companies have already invested heavily in the US facilities, creating thousands of US jobs (i.e. Samsung, Hundai, Kia, Hanjin) with much, much more in the offing in order to deliver US consumers SK product more logistically econocically. Benefits of KORUS FTA would far outway any concern for unionization of US manufacturing investment on US soil in this regard, and cement goodwill between the US and its staunchest supporter in the Pacific Rim.

  • Posted by Pete Sanders

    One of the reasons often given for KORUS is to solidify the US-S. Korea alliance so that we can count on S.Korean support in case of conflicts with China, especially over Taiwan.

    But just as a Korea-EU FTA hurts the US, there are losers to KORUS–Japan and especially smaller Taiwan, two strong and crucial allies for the US in East Asia. It is a dangerous game to ignore the collateral damage of bilateral FTAs, especially when it hurts some of our more vulnerable allies in the face of a rapidly rising China.

    The solution of course isn’t to simply reject KORUS, but to renegotiate a 3-way or 4-way agreement between Japan, S.Korea, and Taiwan. Taiwan was ready the day before yesterday to sign an FTA with the US and Japan could easily be brought to the table with Korea and Taiwan on board. Taiwan and Korea are just too close competitors in the US market to favor one over the other without severe consequences.

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