March 15 (Bloomberg) -- The U.S.-South Korea free-trade agreement took effect today as an opposition party vowed to repeal the accord should it win control of parliament in elections next month. Aides to President Lee Myung Bak, who pushed the deal, urged lawmakers to respect the agreement.
The biggest U.S. trade accord in almost two decades will cut about 80 percent of tariffs between the nations. The deal may increase U.S. exports as much as $10.9 billion in the first year it’s in full effect, according to the U.S. International Trade Commission. It may help South Korea’s economy expand by 5.7 percent within a decade and create 350,000 jobs, Trade Minister Bark Tae Ho said yesterday.
South Korea’s United Progressive Party, which has joined a coalition with the main opposition group, said in a statement it will propose a parliamentary agreement to nullify the deal.
“March 15, 2012, will be remembered not as a day that South Korea lost its dreams but as its first day stepping forward to a progressive future,” United Progressive Party legislator Kang Ki Kab told reporters today in Seoul.
President Barack Obama spoke with Lee by phone yesterday, thanking him “for Korea’s close cooperation in getting the agreement implemented,” according to a White House statement.
‘Must Be Respected’
The trade deal “must be respected, for the benefit of the people,” Choi Young-Jin, South Korea’s ambassador to the U.S., said today in an interview in Washington. “It will create a tremendous problem if this important agreement is revoked. It would be highly unusual.”
South Korea’s United Progressive Party holds seven of 295 seats at the National Assembly, and last week forged an alliance with the Democratic United Party, seeking to gain control of the legislature by tapping into voter discontent over rising inflation and a widening income gap.
Democratic United, which controls 89 seats, has objected to terms of the accord without calling for a complete repeal. The party for months stalled the government’s efforts to put the bill for the agreement to a vote, on several occasions physically blocking lawmakers entering subcommittee meetings to prevent its advance to a plenary session, according to the majority National Frontier Party.
The accord will remove duties on almost two-thirds of American farm exports, and phase out tariffs on more than 95 percent of industrial and consumer exports within five years. The Obama administration also says free-trade deals with South Korea, Colombia and Panama, ratified by Congress and the president in October, will create or support at least 70,000 U.S. jobs.
Tariffs will be lifted on car parts to the U.S. and will help increase South Korean exports of the products, the Korea Automobile Manufacturers Association said today in a statement.
South Korean opposition lawmakers say the agreement benefits U.S. industries and jobs at the expense of South Korean laborers, farmers and small businesses. The Democratic United Party also objects to the Investor-State Dispute settlement clauses, which let foreign investors take legal action against South Korea, as undermining the country’s sovereignty.
Lee’s National Frontier Party rammed the deal through South Korea’s parliament in November over the objections of opposition lawmakers concerned about the impact on agriculture and investment. The party is striving to overcome a series of scandals to keep from losing parliamentary control next month and presidential elections in December.
The ruling party’s approval ratings stood at 40.3 percent, according to a weekly poll by Seoul-based Realmeter conducted March 5-9, before the opposition coalition was announced. The survey of 3,758 people had a margin of error of plus or minus 1.6 percentage points. The DUP’s popularity was at 32.7 percent and the UPP was at 4.8 percent.
Lee’s approval rating was at 27.1 percent, down from 76 percent when his term began in February 2008.
Repealing the accord “won’t jeopardize national confidence” because under the agreement “any of the two countries could nullify the deal,” Rhyu Si Min, a leader in of the United Progressives, said in an interview today with YTN Radio. “The DUP calls for a renegotiation of the terms, and we have agreed to respect each other’s difference in opinion.”
In the U.S., the deal was opposed by groups including the AFL-CIO, the largest federation of labor unions and a frequent ally of Obama’s Democratic party. Senators Robert Casey of Pennsylvania and Sherrod Brown of Ohio, both Democrats from manufacturing states facing re-election this year, opposed the accord. They said prior trade measures never worked as well as advertised for U.S. workers.
U.S. Trade Representative Ron Kirk in Washington today called the accord’s implementation “a huge win.”
Obama and Lee “made decisions that on many occasions go against the ‘political grain,’” Kirk said during a reception at the U.S. Chamber of Commerce, the nation’s largest business lobbying group. “Our president knew and inherently understood the power of trade to move our economy forward.”
Kirk thanked the business leaders for lobbying Congress to pass the agreement.
“It’s sort of my sanctuary,” Kirk said of the Chamber, which is located across the street from the White House. “I know people over here like me and won’t scream at me.”
The U.S. is South Korea’s third-largest trading partner and bilateral trade totaled $101 billion in 2011, according to data compiled by the Korea Customs Service. For the U.S., the deal is the biggest since the North American Free Trade Agreement with Mexico and Canada took effect in 1994.