Obama Hits the Trifecta of Failure in Seoul

Bruce Klingner /

Even the most ardent Obama supporter should be embarrassed by the collapse of bilateral trade talks with South Korea. President Obama had correctly hailed the South Korea-U.S. free trade agreement (KORUS FTA) as critically important for the United States. The U.S. International Trade Commission estimated the agreement would increase U.S. exports by $10 billion—a jobs stimulus package that wouldn’t cost the federal government a dime.

But once again the trade accord was held hostage to narrow-minded demands by Congressmen and lobbying groups. Clearly, for the Obama White House, special interests trump national interest.

The media repeatedly mischaracterized the trade discussions this week as close to achieving an agreement. Sorry, but the agreement was already reached—over three years ago when the United States and South Korea signed the completed document. But the Administration adopted North Korea’s (and Speaker Pelosi’s) negotiating strategy—no agreement is final, even after signature.

What makes the debacle in Seoul painfully ironic is that the Obama team was pushing for concessions on beef that go beyond even what industry groups were advocating. The major beef exporter groups have publicly declared they are satisfied with the existing KORUS agreement and argued against further changes.

Several years ago, South Korea closed its market to U.S. beef after a few cases of mad cow disease were discovered. But American beef returned to South Korea two years ago and sales are rapidly climbing. U.S. beef is regaining market share and is on track to resume its position as the largest foreign importer.

The United States appears to have torpedoed the trade talks with last minute demands to force the Korean market open to U.S. beef over 30 months old—a minor category that would only provide a few percentage points of potential sales at best.

Pressure by U.S. automobile manufacturers and auto unions likely also played a part in the disintegration of the talks. One demand was to exempt U.S. cars from Korea’s more stringent emission standards—an odd request given the congressional leadership’s May 2007 demands that Seoul adopt stronger environmental standards.

Obama’s decision to allow the talks to collapse—and make no mistake, the decision was made at the presidential level—was a colossal blunder. It reflects serious shortcomings in his strategic thinking since it will have dramatic repercussions for U.S. foreign policy. Not only does it show the emperor has no clothes when claiming he favors free trade, but unless he can get this back in the very quick order he referenced in Seoul, the U.S. will lose all credibility in pushing other trade issues, such as the nine-nation Trans-Pacific Partnership trade deal.

Walking away from the KORUS will hurt U.S. economic recovery, strain relations with a key U.S. ally, and undermine American trade objectives—a true trifecta of failure.