Obama to Set November Deadline to Finish South Korea Free-Trade Agreement
President Barack Obama said he will revive stalled free-trade talks with South Korea, with the goal of finishing a deal during his November visit to Seoul and submitting a reworked accord to Congress in the following months.
Work to modify the trade agreement to meet objections from some U.S. lawmakers will be done in a “methodical fashion” before the Seoul trip, Obama said after meeting with South Korean President Lee Myung Bak today in Toronto, where both leaders are attending a Group of 20 summit.
“It is the right thing to do for our country, it is the right thing to do for Korea,” Obama said. “It will strengthen our commercial ties and it will create enormous potential economic benefits to create jobs” in the U.S.
U.S. Trade Representative Ron Kirk will take the lead in retooling the pact with his counterparts in South Korea, America’s seventh-largest trading partner, this year. Kirk will also be in charge of negotiations with Congress, where lawmakers are demanding wider access for Chrysler Group LLC, Ford Motor Co. and General Motors Co. U.S. automotive-industry and unions have lobbied for better access to Korean markets.
Completing a free-trade agreement with South Korea by November, when the G-20 is next scheduled to meet in Seoul, is central to the U.S. president’s goal of doubling exports over the next five years to help American manufacturing and agriculture. The effort would follow a call for more bilateral trade agreements from the leaders of the Group of Eight nations, who met earlier today in Huntsville, Ontario.
Stalled Agreements
While the U.S. has negotiated agreements with South Korea, Colombia and Panama, Obama hasn’t sent the accords to Congress for approval. Setting a deadline for the South Korea pact, and announcing his intention to send it to lawmakers, distinguishes it from the other two pending trade deals.
Citigroup Inc. Chief Executive Officer Vikram Pandit said Obama’s push for an accord “couldn’t come at a better time.”
“A Korean-U.S. free trade agreement should lead to increased trade and investments, driving growth and job creation to fuel our economic recovery,” Pandit said in an e-mailed statement.
FedEx Corp.’s Frederick Smith also hailed Obama’s announcement, saying it “will provide access to this important market for American businesses and will increase job opportunities for the employees of those businesses.”
Congressional Objections
The effort to amend the pact won’t lead to a reopening of the original deal, signed in 2007, according to an administration official who provided details of the plan on condition of anonymity.
Rather, the U.S. will try to bridge gaps on a few issues, including disputes on autos and beef, that have led several lawmakers, including House Ways and Means Committee Chairman Sander Levin, a Michigan Democrat, to signal their opposition.
Iowa Senator Charles Grassley welcomed the move and said the president needed “to do the same with our stalled trade agreements with Colombia and Panama.”
“I urge the president to commit to finish negotiations on all three agreements by the end of the year, if not sooner,” Grassley, the ranking Republican on the Senate Finance Committee, said in a statement.
Beef Barriers
Committee chairman Montana Senator Max Baucus, a Montana Democrat, said he agreed with Obama’s plan to move forward on the accord, calling it “the most commercially-significant trade agreement in more than a decade.”
He said he wanted the U.S. negotiators to eliminate the “unscientific barriers Korea has erected against American beef.”
The U.S. Chamber of Commerce estimates that failure to enact the accord with the world’s 14th largest economy means the loss of $35 billion in exports and 345,000 jobs. South Korea signed a rival agreement with the European Union last year that calls for 99 percent of commerce to be duty-free within five years.
The Chamber today issued a statement saying the administration will get its “full support” in pushing the accord forward.
The agreement seeks to eliminate South Korea’s 7 percent tariff on industrial goods and services, according to the official, who said that their average tariff rate on agricultural products is almost 9 times that of the average U.S. tariff on agricultural products.
Commitment to Trade
Today’s announcement could also allay global concerns that the Obama administration isn’t committed to free trade. Leaders from the Group of 20 nations are meeting in Toronto today to seek common ground on plans to assure investors that an economic recovery is on track even as policy divides increasingly emerge.
Leaders from Europe, Asia and Latin America have been skeptical that the U.S. would push for free trade agreements ahead of the November mid-term elections, said Charles Freeman, a fellow at the Center for Strategic and International Studies and former U.S. trade official.
On the agenda at the G-20 meetings, “trade is really notable in its absence,” Freeman said.
The administration is seeking to balance its export goal with a strategy to respond to complaints from lawmakers that the trade agreements fail to align some labor, tax and environmental policies in those nations with laws in the U.S.
The trade negotiations also have security implications and are a sign of U.S. commitment to South Korea as a critical strategic ally in Asia, the official said. Tensions in the region remain elevated after an international panel last month blamed North Korea for sinking the South Korean warship Cheonan in March.
North Korea has denied involvement and threatened an “all- out war” if it was subjected to any punitive actions for its alleged role.
Obama today said the U.S. will fully support South Korea in confronting the north over the ship sinking. “There has to be consequences for such irresponsible behavior,” he said.
Resolving differences over the free-trade agreement is important to solidify cooperation on other strategic challenges, the official said.
To contact the reporters on this story: Julianna Goldman in Toronto at jgoldman6@bloomberg.net; Hans Nichols in Toronto at hnichols2@bloomberg.net
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