Trading up with South Korea
When Democrats ruled Washington in 1993, they backed a free-trade pact with Mexico and Canada. Now a GOP president has asked a newly Democratic Congress to support a trade deal with America's seventh-largest trading partner and a strategic ally, South Korea. Easy choice, right?
Not with a new protectionist sentiment on Capitol Hill that says American companies and workers aren't able to compete as well as in the past. The mood has shifted from an era when America opened its borders to goods from many anti-communist allies such as South Korea to boost their poor economies.
Now more lawmakers in Congress demand greater reciprocity in trade and more protection for a shrinking number of American jobs in manufacturing. The unspoken refrain goes like this: Better to try to save the American piece of the world-trade pie than expand the pie.
With that kind of shortsightedness on economics, it will be difficult for President Bush to get this South Korean pact through Congress by July, when his ability to have such deals go to a simple up-or-down vote expires. Congress is already sitting on lesser deals negotiated with Colombia, Panama, and Peru. And few lawmakers are pushing to revive talks for a new global trade agreement.
To some degree, anti-free trade lawmakers are right on one point: US companies have been blocked by many nations from doing what they do best. They excel in many high-tech areas, in media and culture, and especially in agriculture and in such services as finance, law, and accounting. Those fields are the future for US job creation.
But the South Korea pact would provide a critical beachhead in Asia for the US to advance those interests in the most economically dynamic part of the world.
South Korea is the world's 10th largest economy, and one that's largely industrialized. It needs more US companies in its economy in order to stay competitive with Japan, India, and China. And that means it must, with political difficulty, open its doors to more US cars, beef, banks, soybeans, and movies.
The pact is far from perfect. It protects Korean rice farmers from far less expensive US rice. And US carmakers will still face subtle barriers to selling more vehicles in Korea. That's the normal give-and-take of trade deals. The whole should not be lost by focusing on a few parts. This deal is expected to boost bilateral trade by about 20 percent, with most of that in the US favor.
It would be the largest free-trade pact for the US since NAFTA. It might also revive US-South Korean ties, which have eroded over different approaches to North Korea and a rise of anti-Americanism among South Koreans. Those ties are so strained that the American people might be reluctant to back the South in another war with the North.
The US needs this pact to work so it can pursue similar ones elsewhere in Asia – which is home to half of humanity and the fastest growing economies. Opening the way for US companies to compete better in Asian nations will help the US compete better with Asian goods in its own market. Congress needs to approve the pact to keep American prosperity humming.