Korea-U.S. FTA

Korea in the National Trade Estimate

The United States Trade Representative released the 2008 issue of its annual National Trade Estimate Report on Foreign Trade Barriers on Friday.  The chapter on Korea (Korea) gives a 14 page overview of the range of U.S. concerns about Korean trade policies.  Here's the USTR's press release: Bush Administration Submits Annual Trade Report to Congress (March 28, 2008).

What Next to Move the FTA Along?

Lee Gi-hong, the Washington correspondent of the Dong-A Ilbo interviews three experts on prospects for the trade agreement: Experts Discuss Pushing Forward FTA with U.S. (March 31, 2008). 

Karan Bhatia, former Deputy US Trade Representative, and Thomas Hubbard, former US Ambassador to Korea, emphasize the importance of resolving the beef issue to change the atmosphere in Congress.  Both Bhatia and Hubbard emphasize that the time is short.  Hubbard thinks there is time for passage this year if the agreement is presented before May.  Both Bhatia and Hubbard note the difficulty presented by Detroit's opposition.  Hubbard thinks, "...some concerns of the U.S. auto industry could require answers from joint efforts of the two countries aside from revision of the deal." (I assume he's saying that concerns might be addressed by a side agreement, rather than formal renegotiation, but he doesn't have time in this interview to explain what the content of a side agreement might be.)

Kim Seok-han, described only as a lawyer and expert on the agreement, is less optimistic than the Americans.  He's skeptical about the prospects for passage in a Presidential election year.  Even if the beef issue is resolved, he sees congressmen raising other issues, including but maybe not limited to, autos.  The fundamental issue isn't the agreement, which is good for both countries, but U.S. domestic politics.  Kim doesn't think ratification is impossible, but time is running out,

The U.S. economy is worsening, and free trade is becoming less and less popular. The Democratic Party is expected to gain more seats in both the Senate and the House. Its leading presidential candidates, Barack Obama and Hillary Clinton, both oppose the deal. Rice will be the next source of controversy after beef and automobiles. Obama has already raised the rice issue. It is best for Korea to close the issues as soon as possible. I don’t think the situation will be any better in 2009.

What happens when U.S. and Korean auto tariffs are eliminated?

Dr.Sang-yirl Nam estimates that the auto tariff provisions of the Korea-U.S. trade agreement - examined independently of the rest of the provisions of the agreement - would provide Korea a $178 million welfare gain, but cost the U.S. about $20 million.

What's the Right U.S. Policy Towards the Kaesong Industrial Complex?

Dick Nanto and Mark Manyin of the Congressional Research Service (CRS) have prepared a report on The Kaesong North-South Korean Industrial Complex (February 14, 2008).  The Complex is an industrial park for South Korean firms located in the north, and using North Korea labor.  Korea tried unsuccessfully to get the U.S. to agree to treat products from the complex as if they were originating in South Korea.  Nanto and Manyin provide an overview of the issue, and discuss U.S. Policy options.  The abstract:

Administration May Push On With the Columbia FTA

The Administration may be moving towards a decision to press for Congressional consideration of the Columbia trade agreement without waiting for Congress to say it's ready (White House gambles on Colombia move, James Politi, FT, Mar 11).  The Administration plans to take care of the trade agreements with Columbia and Panama before it turns to the Korean agreement. 

It's more customary for Congress to initiate the process, but Administration negotiations with Congressional Democrats have apparently not been going anywhere (The Columbia FTA is First in the Queue, Korea-U.S. FTA, March 11). 

This is a high risk strategy (Will the Columbia FTA debate destroy the idea of "fast track"?, Korea-U.S. FTA, Jan 20).  Politi points out:

The Columbia FTA is First in the Queue

The U.S. Administration has wanted to bring the trade agreement with Korea to Congress after the Columbia and Panama agreements are ratified. 

In recent days the Administration and Congress have been trying - so far unsuccessfully - to reach an agreement to bring up the Columbia agreement in a way that gives it a reasonable chance of passing: US-Colombia trade deal faces uncertainty (James Politi and Daniel Dombey, Financial Times, March 11).

Politi and Dombey report that the Columbia agreement has to be submitted within the next month if both the Senate and House are to have time to vote on it this year.  I'd imagine that would apply to the Korea deal as well.

The Administration can force Congress to take up the agreement and start the 90 day approval clock rolling, but it's customary to wait until Congress signals it's ready before submitting a deal.  The Administration has been thinking about forcing the issue and just sending it up for a while now (Will the Columbia FTA debate destroy the idea of "fast track"?).

Congressman Moran Undecided

Remarks by Democratic Congressman James Moran of Virginia suggest the uphill struggle the trade agreement will face in Congress.  Moran was first elected to the House in 1990.  He has a good record on trade issues.  The Cato Institute trade vote tool shows that he voted against trade barriers in 86% of the votes where they've identified this as an issue.  Cato categorizes him as an internationalist.

Yonhap News reports that he told a group of Korean-Americans that he didn't think the agreement would be ratified this year, and much more interestingly, that he didn't know if he could support it (U.S. lawmaker says FTA approval impossible this year, March 4, 2008):

Lee Retains Kim Jong-hoon

Korea's new president has refused the resignation of Trade Minister Kim Jong-hoon.  Kim was appointed by the last administration and was led Korea's negotiating team in the KORUS FTA negotiations: Lee retains leading FTA negotiator (JoongAng Daily, March 8, 2008).

10 reasons to doubt Congress will ratify KORUS FTA this year

Here are ten reasons to doubt that Congress will pass the Korea-U.S. FTA (KORUS FTA) this year: