Will the U.S. commit to free trade with South Korea?

By Fred Hiatt
Monday, April 12, 2010; A17

SEOUL In a world of dangerously failed states and willful challengers to American leadership, South Korea is an astoundingly successful democracy that wants to be friends. But will America say yes?

That seemed to be the question perplexing President Lee Myung-bak when I interviewed him here last Wednesday, though he described relations at the moment as excellent. (Excerpts from our conversation are available here.) The two nations have signed a free-trade agreement that Lee believes would -- in addition to bringing obvious economic benefit to both sides -- seal a crucial alliance and promote stability throughout Northeast Asia. But President Obama has yet to submit the agreement to Congress for ratification or say when he might do so.

Given the neighborhood, you would think the United States would jump at the opportunity. To Korea's east, Japan's rookie ruling party is driving the Obama administration to distraction as Japan tries to figure out, so far without success, whether to distance itself from the United States.

In North Korea, an isolated regime is "facing a transformative moment right now," Lee told me. Recently it "failed dismally in its effort to reform its currency; the state of the North Korean economy is worsening by the day." For the first time, he said, leaders have felt the need to explain themselves to their people.

A reminder of the flashpoint the border remains came March 26, when a South Korean corvette sank while cruising near North Korean waters, with 46 sailors lost from its crew of 104. While the incident is being investigated, Lee refused to speculate on its cause, but he told me, "I'm very committed to responding in a firm manner if need be."

And then there is what Lee called "the China factor."

South Korea now trades more with China than with the United States and Japan combined, he said. Korea values its relationship with China highly, and it is "just a matter of time" before Korea and China open negotiations on a free-trade agreement (FTA) of their own.

But, the president said, he is "concerned about the growing dependence of not only Korea but other countries in the region toward China."

His desire for an American counterweight is shared by leaders throughout East and Southeast Asia, but few will say so as candidly. "For us, the FTA is not just simply a trade agreement or an economic agreement," he said. "It really is much more than that."

Obama has expressed general support for increasing trade with South Korea but hasn't committed to the pact that he and Lee inherited from their predecessors. Every analysis shows it would benefit most American consumers and industries, but it faces opposition from Ford Motor, some union leaders and some Democrats in Congress.

"When you look at the FTA from a bits-and-parts point of view, of course there will be opposition," Lee said. "We have certain members of our industry, certain members of our national parliament, who are vehemently opposed."

"But you really have to look at the whole, entire FTA," he said, "and if it comes out as a plus, then it's the responsibility, I believe, of each country to really go ahead and try to push this through." He added that "it will all hinge upon" how committed the Obama administration is to winning ratification. "If they are, they are going to do all that they can to convince fellow Democrats to get on board," he said.

Lee hoisted himself from an impoverished childhood to become a construction tycoon. (As a businessman two decades ago, he oversaw the renovation of the presidential mansion he moved into two years ago; he now regrets the imposing but energy-inefficient high ceilings, aides told me.) Along the way he earned the sobriquet "Bulldozer"; he is slender and soft-spoken but straightforward.

If anything, though, Lee is too restrained, too polite, to point out how short-sighted the United States would be to slight Korea. With U.S. protection and support, South Korea has transformed itself from a Third World military dictatorship to a prosperous democracy that wants to cooperate with the United States in Haiti, Afghanistan and beyond. Would the United States really allow narrow-interest politics to limit such an opportunity?

Lee told me he is confident that the United States, with its "entrepreneur spirit" and pioneering science, will bounce back from recession (as Korea, with 3.6 percent unemployment, already has).

But he worries, he said, that in the process the United States may waver from its commitment to free trade.

"And it must remain a beacon of free trade to be able to lead other countries around the world in other aspects as well," he said. "The benefits reaped from protectionism are very short-term, but the leadership role that you have, the status and prestige of the U.S., in that regard, are timeless."


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