After more than a year of stalling, President Obama seems finally to have recognized the political imperative of pushing ahead with the South Korean free-trade deal; America’s biggest trade pact since NAFTA. “It is the right thing to do for our country. It is the right thing to do for Korea,” the president said. The statement came with the president’s first ever specific time table for implementing the trade deal. This is all good news. But does it come too late?
From Seoul’s point of view, the pact is signed and sealed. Mr. Lee has already stood up to trade unions and opposition parties to get his parliament to pass the deal. Especially after taking a beating in local elections earlier this month, he cannot afford to be seen making further concessions to the U.S.
Even if South Korea does come to the table, it’s unclear whether the U.S. side can stand up to America’s own trade unions, who likely want more concessions on U.S. access to Korea’s beef and automobile markets. U.S. Trade Representative Ron Kirk said over the weekend that he would work “to ensure that our proposals adequately address outstanding concerns.” Never mind that Congress has already demanded the Koreans renegotiate the deal’s terms—twice.
A third attempt to push for concessions would further tarnish America’s fading international credibility and leadership in free trade. The U.S.-Korea deal, known as Korus, is being watched closely as a measure of America’s commitment not only to freer flows of commerce, but also as a measure of America’s interest in maintaining an important strategic role in the Asia-Pacific region. China, which has been actively expanding its network of bilateral and regional trade pacts, must be monitoring the current development with interest, if not amusement.
Instead of focusing on beef and automobiles, the Obama administration would be better served by accepting the deal as currently worded. Both sides will benefit; Korea has already agreed to reduce tariff rates on 95% of all consumer and industrial products, improve transparency and intellectual property rights protection, and address standards and regulations. The U.S. side has agreed to open its markets further to Korean agriculture and cars. These are the cornerstones of a strong future relationship.
And it’s that future relationship that really matters. Almost 40% of all U.S-Korea trade can be categorized as advanced technology products. Both leaders have announced plans to focus on clean energy and sustainable growth. Why not ink another pact for freer exchanges of technology and experts in those areas, too?
Thanks to the work of his predecessor, George W. Bush, President Obama has the opportunity to ink a profitable trade and investment relationships with one of the most dynamic economies in the world. President Lee has already sacrificed his political capital to hold up his end of the bargain. If President Obama really means what he says, it’s time for him to pony up too.