Korea-U.S. FTA

Obama Says "No" To KORUS FTA, Again

Obama spoke out against the Korea-U.S. trade agreement again on Monday (June 16) in a speech in Flint Michigan.  Unemployment is high in Michigan (8.5% in May, and Flint is an auto town): Obama Renews Attack on Korea-U.S. FTA (Chosun Ilbo, June 19).

Obama's speech dealt with American competitiveness.  He focused on increased funding for education and educational reform, energy security, and increased investment in research and infrastructure.  But these measures also have to be supplemented with "smart" trade policies.  Trade was not the focus of the speech - it only got a couple of paragraphs towards the end.

Here's the full text of the speech: Remarks of Senator Barack Obama: Renewing American Competitiveness. On the agreement with Korea:

But even as we welcome competition, we need to remember that our economic policies must be supported by strong and smart trade policies. I have said before, and will say again – I believe in free trade. It can save money for our consumers, generate business for U.S. exporters, and expand global wealth. But unlike George Bush and John McCain, I do not think that any trade agreement is a good trade agreement. I don't think an agreement that allows South Korea to import hundreds of thousands of cars into the U.S., but continues to restrict U.S. car exports into South Korea to a few thousand, is a smart deal. I don't think that trade agreements without labor or environmental agreements are in our long term interests.

He had a few more remarks about trade in general:

If we continue to let our trade policy be dictated by special interests, then American workers will continue to be undermined, and public support for robust trade will continue to erode. That might make sense to the Washington lobbyists who run Senator McCain's campaign, but it won't help our nation compete. Allowing subsidized and unfairly traded products to flood our markets is not free trade and it's not fair to the people of Michigan. We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products. We cannot let enforcement of existing trade agreements take a backseat to the negotiation of new ones. Put simply, we need tougher negotiators on our side of the table – to strike bargains that are good not just for Wall Street, but also for Main Street. And when I am President, that's what we will do.

New Insights on Korean Beef Controversy and FTA

The latest issue of the Korea Economic Institute's Korea Insight has two short issues on the beef and FTA debates in Korea: (a) Troy Stangarone describes A Firestorm in Korea Over U.S. Beef, while James Lister and Stangarone provide an FTA Update. Short, readable, summaries of recent events. Some interesting points:

Back and Forth in DC

On Wednesday, Hillary Clinton and 11 other Democratic Senators released a letter opposing ratification of the agreement with Korea: Hillary, senators tell Bush they oppose Korea FTA (Yonhap News, May 26).

On Friday, Bush made a pitch for Congress to take up and ratify the bilateral trade agreements lined up for consideration ( Bush Pushes for Free-Trade Deal Approvals, John McKinnon, Wall Street Journal, May 24).  Here's the text of his remarks: (President Bush Discusses World Trade Week ).

Obama released a letter Friday, just after Bush's remarks, urging him not to submit the agreement (Obama urges Bush not to submit Korea deal to Congress (Doug Palmer, Reuters, May 23)):

"Instead of provoking unnecessary and potentially corrosive confrontation over this agreement, your administration could make a significant contribution toward re-establishing trust with Congress and restoring bipartisan cooperation on trade by withholding the agreement," Obama said....

"Like many members of Congress, I oppose the U.S.-Korea FTA, which I believe is badly flawed. In particular, the terms of the agreement fall well short of assuring effective, enforceable market access for American exports of manufactured goods and many agricultural products," Obama said.

He singled out the automobile provisions as unfairly tilted in South Korea's favour.

"Approval of the agreement as negotiated would give Korean exports essentially unfettered access to the U.S. market and would eliminate our best opportunity for obtaining genuinely reciprocal market access in one of the world's largest economies," Obama said.

Palmer notes that Obama's letter "...followed a similar letter this week signed by New York Sen. Hillary Clinton, Obama's rival for the Democratic nomination, and nine other Democrats."

Palmer describes one Republican spokesman's response to Obama's letter (Obama urges Bush back off South Korea trade deal) (Palmer, Reuters via bilaterals.org, May 23):

"Barack Obama’s letter is the sort of naive isolationism that will slow job growth at home and damage our relationship with a key ally," Republican National Committee spokesman Alex Conant said in a statement.

"It’s concerning that while Obama lectures us about the need to negotiate with our enemies, he would simultaneously reject a closer relationship with an ally who deployed the third-largest contingent of troops to Iraq," Conant added.

Edit May 31: added sentance about the Clinton letter.

Congressional Prospects

Victoria McGrane reviews the prospects for Congressional approval: Future uncertain for U.S.-Korea FTA (Politico, April 29) and surveys the parties ranged on either side of the debate.  Much of the emphasis is on the auto industry.

Congressional Democrats Remain Unenthusiastic

On Thursday and Friday Korea and the U.S. reached agreement on two issues related to, but not part, of the trade agreement: Korean restrictions on U.S. beef imports, and Korean eligibility to participate in the U.S. visa waiver program.  This should eliminate an important barrier to Congressional consideration of the trade agreement, and should improve the atmospherics in both countries

However, Congressional Democrats still don't seem unduly enthusiastic:

Don't Expect Beef Concessions at Next Week's Summit

Evan Ramstad, who reports on Korea for the Wall Street Journal, says the U.S. shouldn't expect concessions on beef from Korea in next week's summit meeting between Presidents Lee and Bush: Seoul Unlikely to End U.S. Beef Ban (April 11).   

Key U.S. legislators have made it clear for a long time that Congress isn't going to consider the trade agreement until Korea frees up the beef trade; but why should Lee make concessions on beef -and antagoinize his domestic beef interests - to get Congress to consider the agreement, when there are so many other reasons to be concerned about ratification?

Ramstad reports:

Bad News From the Beltway This Week

Congress is supposed to take action on a trade agreement negotiated under the trade promotion authority within 90 days of the date the president submits it.  However the 90 day requirement just lies in the legislature's rules, and a legislature can change the rules it sets for itself. 

Nancy Pelosi announced Wednesday that she is going to try and do that with respect to the Columbia trade agreement: Pelosi Statement on House Removing Timetable from Consideration of Colombia Free Trade Agreement (press release, April 9).  Normally the president doesn't submit until he gets a "go-ahead" from Congressional leaders; in this case that hadn't come, and he got tired of waiting.  Pelosi's statement reads:

Bush Sends the Columbia Agreement to Congress

The Bush Administration wants to take care of Congressional ratification of the trade agreements with Columbia and Panama before it turns to the agreement with Panama. 

Today it sent the agreement with Columbia to Congress: Bush forces trade fight (Ian Swanson, The Hill, April 7, 2007).  The problem is that normally these agreements aren't sent up until Congress signals its readiness to receive them.  In this case, the Administration was concerned that time was running out.

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.