On one side, local and national business leaders are urging Congress to approve the agreement, citing the success of NAFTA and its effect on US exports and job creation. President Obama, at the time of his signing of KORUS-FTA, stated that deal would “boost US exports to 11 billion and support at least 70,000 jobs.”

Failing to act would hurt the US as well, proponents of the measure argue, as South Korea is in talks with Canada about a free trade agreement and has already inked one with the European Union. If approved, these agreements create a more attractive trading option for South Korean businesses than what the US has to offer, and thus inevitably decreasing the amount of US exports to South Korea.

If approved, the US will benefit from the gradual reduction of South Korea’s current tariffs of up to 40%, all the way down to zero in 95% of industries within three years, with most remaining tariffs being eliminated within ten years. This will obviously aid many trade industries by reducing the cost of trade and opening new opportunities, including the auto industry and the National Cattlemen’s Beef Association (NCBA), who, along with 60 other food and agricultural groups and companies, have sent a letter to Speaker of the House John Boehner (R-Ohio); House Democratic Leader Nancy Pelosi (D-Calif.); Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (R-Ky.) in support of the recent agreement.

However, not all businesses and politicians support the agreement because they believe the agreement will actually hurt US businesses and create major job loss due to jobs going overseas. California, one of the US’s largest traders with Korea, lost 800,000 jobs due to NAFTA, according to the California Labor Federation, and would likely see further erosion of jobs with another free trade agreement.

California does not necessarily hold the trend for the rest of the US, as it shares the closest ties with South Korea with more than half of a million South Koreans living in the state, and thus is the most vulnerable economically.

Overall, free trade agreements will at the very least increase opportunities for US businesses to increase exports, and will likely save or create jobs as well. The free trade agreement is even more vital if the EU and Canada agreements get finalized, as US cannot afford to fall behind and lose export revenue to the Asian economic giant.

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Last week, two high-level officials “‘exchanged views on the timing and venue of an upcoming ministerial-level meeting on the trade agreement,’ said Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office.”

The two countries signed the agreement more than three years ago. It has languished because of U.S. auto industry concerns that it removes remaining U.S. tariffs on South Korean cars but does not do enough to eliminate non-tariff barriers that keep American cars out of South Korea.

Read the complete article: U.S. and South Korea eye date for trade pact meet.

In other news, the Governor of California, Arnold Schwarzenegger, called for ratification of the trade agreement during a speech made at the American Chamber of Commerce in Seoul:

“One of the most powerful tools to spread freedom, peace and prosperity is free trade and free enterprise. In his State of the Union Address, President Obama pledged to double American exports in five years and I commend him for his vision. Now we need to see the action,” said Governor Schwarzenegger. “The U.S.-Korea Free Trade Agreement, and two others, has been gathering dust in the halls of Congress for over three years. And while we stall, other global leaders are picking up the slack. The ratification of these agreements will lead to increased exports, production and investment, all of which create jobs at a time we need them most. So I say to Congress, if your number one priority is stimulating our economy, approve these free trade agreements so we can start putting people back to work — not next month, not next year, but right now.”

Read more of the Governor’s statement at: Governor Calls for Approval of U.S.-Korea Trade Agreement from the California Chamber of Commerce.

Jim McNerney, Chief Executive of Boeing, noted that the US economy is still “fragile” and said “We need to borrow less, save more, become more efficient and competitive and bring our exports back in line with our imports. Opening up and expanding new markets is paramount,” in his speech to the Chicago Council on Global Affairs.

The Financial Times states:

As chairman of President Barack Obama’s export council, Mr McNerney has been tasked with leading industry’s side of a campaign to double US exports within five years – an effort that the White House projects will create two million US jobs. Boeing is the world’s second-largest aircraft-maker and one of the US’s biggest exporting companies.

McNerney also added, “The Obama administration, in my view, is not moving fast enough. I would encourage them to move faster on … free trade agreements with Korea, Colombia and Panama.”

Although the US signed trade agreements with South Colombia, South Korea, and Panama in 2006 and 2007, Congress has failed to approve the agreements. Companies are looking to President Obama to get the ball rolling again to pass these agreements into effect.

Specifically, McNerney believes Korea and Colombia to be new markets where European corporations (Ahem, Airbus perhaps?) were able to export under a lower-tariff regime than US Companies.

Read more at: “Boeing urges faster action on trade deals” in the Financial Times.

According to a report by the ministry, South Korea will launch the joint study, in which government officials, scholars and business representatives from all three countries will participate.The report says that along with the trilateral agreement, the country will continue to push for settling separate bilateral trade agreements with China and Japan.

South Korea has been seeking more economic integration within the Northeast Asia by creating favorable conditions for free trade agreements.

Read the (very brief) complete article.

Analysis: Call South Korea duty-free butter, because it is on a trade agreement roll!

South Korea has been racking up trade agreements with the EU, India, New Zealand, and Canada recently. That is in addition to its existing agreements with Singapore, EFTA, ASEAN, Chile, and Peru.

South Korea is strongly expanding its competitive reach in the global market by offering its already competitive products (specifically cars and electronics) at what will be an even lower cost in markets like the EU, Canada, and New Zealand.

The possibility of this agreement creates even more pressure on the standstill KORUS trade agreement, which is awaiting approval by US Congress. If American products are to remain competitively priced in countries such as China, Korea, and Japan, passing KORUS will be key to their success.

From the New York Times, on Thursday:

At a news conference in Seoul, South Korea, Mr. Obama and the president of South Korea, Lee Myung-bak, both declared their desire to renegotiate elements of the agreement and to have both countries ratify it as soon as possible.

“I am a strong believer that both countries can benefit from expanding our trade ties,” Mr. Obama said. “I have told President Lee and his team that I am committed to seeing the two countries work together to move this agreement forward.”

However, since Thursday it has become unclear whether the two nations will be able to renegotiate the terms of the agreement, as the South Korea foreign trade minister ruled out additional trade talks on Friday.

US Manufacturers oppose the agreement, saying it does too little to open the Korean market and they will face an influx of Korean competitors. Proponents counter that, with Korea’s new trade agreement with the EU, the US must approve this deal if it wants to remain competitive in both markets.

Read the complete article at: South Korea Trade Pact Is Revived by Obama

As part of the deal, South Korea will recognize European rules protecting regional products such as France’s famous Champagne bubbly, Italy’s Parma ham and Greece’s feta cheese. Conversely, some EU manufacturers – automotive in particular- are lobbying to prevent approval of the agreement as it would allow lower-priced Korean competitors into their home markets.

To ease car manufacturer concerns, Ashton said she had obtained “safeguards” to limit foreign content of cars assembled in Europe, giving EU authorities a right to impose temporary duties if they notice sudden surges of cheap car imports.

“I am very proud,” she told a news conference, “of the fact that we have been able to show not only that we were able to talk about fighting protectionism but that we were able to do the deals to open our markets.”

Under the agreement, the two sides will remove virtually all tariffs between their economies, as well as many nontariff barriers, over a five-year period.

The European Commission said that the trade in goods between the E.U. and South Korea was worth around €65 billion, or $95 billion, in 2008, and that the deal is worth €19 billion to European exporters alone. The E.U. runs a deficit with Korea in goods trade.

Ms. Ashton said that the agreement was “the first of a new generation of trade agreements” with countries that have high growth but also high entry barriers. She declined to say which country would come next

The EU-South Korea accord is the second-biggest free-trade deal ever, eclipsed only by the $1 trillion North American Free Trade Agreement between the U.S., Canada and Mexico that began in 1994.

The state-run Korea Institute for International Economic Policys estimates that Korea’s GDP may grow almost 3.1 percent in the “long term” as a result of the accord and may also lift employment by about 3.6 percent.

Additionally, according to the Financial Times:

The pact appears to match the US version quite closely. “There is no doubt the Korea-US agreement was used as a benchmark or even a model from the Korean side,” says Christopher Dent, professor of east Asian political economy at Leeds University in the UK.

The advances in the EU-South Korea trade agreement send an urgent message to the US, verbalized by South Korean Ambassador to the United States Han Duk-soo.

The United States will be at a competitive disadvantage in the South Korean market unless Congress approves a bilateral free trade agreement signed two years ago, a Korean official said on Thursday.”Korea strongly hopes this agreement will be put into effect as soon as possible,” South Korean Ambassador to the United States Han Duk-soo said.

Duk-soo also hopes that Congress will be able to approve the agreement prior to President Obama’s visit to Korea in November, after the Healthcare issues have been resolved.

EU-South Korea Trade Agreement References:

• “Europe & South Korea Take Step Toward Trade Pact” – New York Times
• “EU, SKorea reach trade pact” – AP
• “South Korea urges U.S. to approve trade pact” – Reuters
• “EU buoyed by draft South Korea trade deal” – Financial Times
• “EU, Korea Trade Deal May Be ‘Wake Up Call’ For US” – Bloomberg

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