Mr. Obama's Korea trade deal setback
FOR THOSE WHO believe, as we do, that free trade can help fight global recession and prepare the U.S. economy for a new, more competitive future, President Obama's trip to Asia was a disappointment. In particular, Mr. Obama's negotiators were unable to agree with their South Korean counterparts on revisions to a much-delayed U.S.-Korea free-trade pact, which Mr. Obama had promised in June. Though both countries insisted the talks would continue, it's anyone's guess when Congress and the Korean National Assembly will finally get to vote on free trade between South Korea and the United States.
This setback has many authors, including Korean protectionists who stoked a public overreaction to a long-ago outbreak of mad cow disease in the U.S. cattle herd. But Mr. Obama and his fellow Democrats in Congress have the most to answer for.
The Bush administration completed the U.S.-Korea free-trade deal in mid-2007. The heart of the agreement is a three-year phaseout of tariffs on 95 percent of all consumer and industrial products on both sides. The vast majority of U.S. business sectors favor the deal, and it would help both economies to grow. However, congressional Democrats blocked it, arguing it would cost American jobs, and as a candidate for president in 2008, Mr. Obama rejected the deal as "badly flawed." In office, he dithered for months before finally declaring himself in favor of moving forward with a revised treaty.
In opposing the deal during the campaign, Mr. Obama echoed claims by Ford and the United Auto Workers. Under the agreement, South Korea and the United States would end their respective tariffs on autos and light trucks; Korea additionally pledged to reduce tax and regulatory obstacles to imports, and it accepted a mechanism that could permit the United States to reimpose tariffs if Korea tried to reestablish non-tariff barriers. Ford and the UAW say that isn't enough, insisting on guarantees that Korea won't use environmental and safety standards as a de facto bar to U.S. vehicles. In the most recent talks, Mr. Obama has been trying to get the Koreans to meet him halfway on this point.
It's true, as Ford says, that, before the recession, Korean companies sold more than 700,000 cars per year in the United States, about 100 times as many as U.S. companies sold in Korea. But the U.S. market is 16 times larger than Korea's, and about a third of Korean cars sold in the United States are built in U.S. plants, not imported. Maybe what really worries Ford is not the lack of U.S. access to the Korean market but the potential for increased Korean access to the U.S. market.
The administration argues that its effort to revise the auto provisions is simple political realism: Accommodating the U.S. auto industry is the price of congressional approval. Perhaps. But the president brought this predicament on himself by campaigning against the agreement and then trying to pivot, belatedly, in a different direction. Under the circumstances, we can understand why Seoul is not inclined to cut Mr. Obama too much slack. A deal's a deal - and, in this case, a good deal for the vast majority of businesses and workers in both countries.