Whatever Happened to the US-Korea FTA?

I almost forgot about this one. As you probably know, any number of bilateral free trade agreements have been held up under the Obama administration that were in various stages of completion during the second term of his predecessor. Bad economic times have soured the people's representatives on passing such agreements in fear that they may be perceived as "exporting US jobs" or suchlike neo-protectionist sentiments. Although the Democrats have tried to improve their populist credentials by saying labour and environmental standards will be considered with new trade deals, no one is quite sure of whether such standards merely represent backdoor protectionism.

In addition to pending FTAs with Colombia and Peru, the United States has another with South Korea under the wraps. Early last year, Korean legislators thought it contentious enough to engage in fisticuffs over. However, the Obama administration entering office has seen a cooling down period on both sides. Now, though, the Obamanites indicate that they want to move on KORUSFTA (Korea-US Free Trade Agreement) before November when the G20 meets in Seoul, South Korea. Remember, South Korea is the current chair of the G20. However, it remains to be seen how contentious issues can be resolved without renegotiating the pact:

The US said at the weekend it will seek to complete a long-stalled trade deal with South Korea...The White House said the revised pact would be agreed before the next G20 meeting, in South Korea in November, and submitted to Congress in the following months. The drive to revise and ratify the Korea "free trade agreement" has faced determined opposition in Seoul and within Barack Obama's Democratic party in Congress.

The US insisted the move would not involve renegotiating the draft agreement, which was finalised in 2007 during the administration of George W. Bush. The pact has languished amid complaints from US beef and vehicle producers that they are kept out of the Korean market, and a suspicion of trade deals among congressional Democrats.

But officials could not say how they would resolve the outstanding issues without reopening the pact. Renegotiation would be strongly opposed in South Korea and could jeopardise the White House's ability to push the deal through Congress using so-called "trade promotion authority".

Sander Levin, chairman of the House of Representatives ways and means committee and congressman from the carmaking state of Michigan, gave the announcement a highly qualified welcome. "Congress expects to be consulted actively in these negotiations, and the date targeted by Mr Obama can be met only if the outstanding issues are fully addressed with enforceable commitments," he said.

Among those keen on completing KORUSFTA are delivery giant the United Parcel Service, which sees opportunities plying more of its services between the two countries:

UPS applauded the Obama administration for its move to re-engage with the government of South Korea to overcome remaining obstacles and finalize a bilateral free trade agreement. The administration announced over the weekend that it had made new progress on the free trade pact and that it had agreed with Seoul to finalize outstanding issues by November. The President is attempting to end a three-year impasse on a trade agreement reached with Korea in 2007 as another step in his initiative to double American exports over the next five years.

"South Korea has the 14th largest economy in the world and the increase in trade that will come from this agreement means more jobs and more global competitiveness for the two countries," said Scott Davis, chairman and CEO of UPS. "South Korea is our seventh largest trading partner and we need to protect and expand that relationship."

However, the US automotive industry (or better yet, what's left of it) remains cautious. FoMoCo says KORUSFTA ought to be renegotiated given its unfairness to American automakers. You've got to hand it to these guys for cheek. If you will recall, Japan was the target throughout the 80s and 90s of complaints that very few US-made cars were sold there. However, the problems with American cars were that--in addition to being left-hand drive--they were too big, too thirsty, and let's face it, too poorly made to be competitive. So many years on and you can't exactly say that American automakers have addressed these concerns as they have all had near-death experiences on their home turf. If you can't even sell these clunkers in America, what more abroad? But I digress. Maybe Koreans can love monster SUVs as an acquired taste...

Ford Motor Co. today praised the White House's decision to work toward improving U.S. automakers' access to the South Korean market. "Ford Motor Co. looks forward to working with the administration and Congress on an agreement that provides meaningful market access for our manufacturers, that shows rapid growth of American-made automobiles sold in Korea, and that is enforceable," Ford said in a statement.

The Dearborn automaker said it is "pleased that the Obama administration has committed to negotiate improved auto provisions to ensure that the U.S.-Korea trade agreement will actually help open one of the most closed markets in the world to automotive imports."

Ford said the South Korean government "has a long history of actively intervening in the market to exclude imports. "A well-negotiated U.S.-Korea Free Trade agreement," it said, "represents the last, best chance to open the Korean market to imported automobiles." Most U.S. automakers have opposed the agreement negotiated under the Bush administration because it did little to open the closed auto market. General Motors Co. has stayed neutral, because of its South Korean unit GM Daewoo, which is the fourth-largest automaker there.