Can Obama, Lee sell lawmakers on US-South Korea free trade deal?
Just as hopes were fading for the US-South Korea Free Trade Agreement, negotiators came to terms on prying open the South Korean motor vehicle market to placate angry US carmakers and labor unions.
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Perhaps the greatest irony is that Obama, as a senator from Illinois, and Secretary of State Hillary Rodham Clinton, then a senator from New York, had opposed the agreement for fear that a flood of South Korean exports would hurt US manufacturers and cost jobs. Another irony is that Obama’s conservative predecessor, George W. Bush, and the conservative Lee’s left-leaning predecessor, Roh Moo-hyun, had both strongly favored the agreement.Skip to next paragraph
In Pictures Obama's Asia trip
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Main terms of the deal
Although South Korean negotiators repeatedly said they would not “revisit the text” of that deal, they finally had to accept a “supplementary” agreement. Its main terms:
- Opening South Korea to importing 25,000 cars a year from each US motor vehicle manufacturer without demanding they meet detailed South Korean rather than American safety standards
- Easing fuel consumption and greenhouse gas emission standards for US motor vehicles
- Cutting tariffs on US imports from 8 to 4 percent for five years and then eliminating them while the US retains its 2.5 percent tariff for the same period.
- Retaining the 25 percent US tariff on trucks for eight years before dropping the tariff after 10 years
- Cutting South Korea’s tariff on electric cars and hybrids from 8 to 4 percent and ending the tariff after five years
- Retaining a tariff on pork until 2015 rather than 2013 and continuing to bar import of US beef from cattle more than 30 months old.
Ford Motor CEO Alan Mulally, said Ford, which had previously warned against the deal, now “applauds the outlines” of the agreement. Its revised provisions, he said, give “greater confidence that we will be able to better serve our Korean customers. He thanked the efforts of “the Obama administration and Congress to improve this agreement, and open the Korean auto market."
Where's the beef?
The beef issue, though, has diminished in importance since US beef has captured 35 percent of the beef imports, in strong competition with Australian beef, since mass demonstrations shook Seoul for several months in 2008 after mad cow disease was wrongly reported found in an American cow.
Whether the agreement will help redress the huge US deficit with South Korea, however, remains far from certain. In two-way trade last year totaling $67.8 billion, the US imported products valued at $39.2 billion from Korea while exporting $28.6 billion. US carmakers sold vehicles worth $161 million to Korean buyers in 2009 while Korea’s manufacturers, led by Hyundai Motor Co. and its sister, Kia Corp., earned $5.7 billion from 2009 exports to the US.
Proponents feeling good
Advocates, however, are convinced the agreement will work out well for both South Korea and the US.
“The KORUS FTA will add an important third pillar to our already strong bilateral political and military alliance,” says the chamber’s president, Amy Jackson. “Today’s announcement is great news for all of us, in particular for US and Korean companies and workers who will soon be able to reap the many benefits that this agreement will bring to both countries.”
Kim Sung-han, a professor in the Graduate School of International Studies at Korea University, predicts the majority Grand National Party will eventually muster enough votes in the National Assembly to bring about ratification early next year.
“It should be seen as part of the US-Korea alliance,” he says. “That’s why we should not miss this opportunity. It may be the last opportunity we have.”