Korea-U.S. FTA

Ford Pushes, South Korea Pushes Back

Doug Palmer (Ford and South Korea dig in heels over trade deal, Reuters, Sept 26) reports that Stephen Biegun, Ford's Vice President for International Governmental Affairs, has

...warned of a fight in the U.S. Congress that could damage the entire free trade agenda unless the pact is renegotiated to address an "ever-changing pattern" of South Korean barriers to keep out auto imports.

Palmer says that "Ford has emerged as the biggest industry opponent of the free trade agreement."

Seok-young Choi, economic affairs minister at the South Korean embassy responded that, South Korea has no intention to renegotiate.

Choi called Biegun's concern "totally unreasonable" and said the U.S. auto industry was blaming South Korea for its own chronic problems. "The U.S. auto industry has little interest in penetrating the Korean market," as shown by its disregard for Korean consumer preferences, he said.

"The U.S. government should do something for the U.S. auto industry, but why should Korea?" Choi said.

Schott on the Auto Provisions

Detroit's opposition to the auto provisions of the Korea-U.S. FTA has become one of the key issues for opponents of the agreement.  Both Ford and Chrysler, and the UAW, have come out against the agreement.  Many Democrats have echoed their concerns.

In 2006, while Korea exported about 700,000 cars to the U.S., the U.S. only was able to export about 4,500 to Korea.  Even setting aside the differences in population and per capita income, this seems like a large difference.  There are certainly tariff barriers to U.S. exports to Korea, but the industry has also pointed to other, persistent, non-tariff barriers, as a big concern: Korea's NTBs on foreign autos (Ben Muse, July 8, 2007).

Jeffrey Schott, a senior fellow at the Peterson Institute, reviewed key provisions of the Korea-U.S. FTA in a recent Institute Policy Brief (The Korea-US Free Trade Agreement: A Summary Assessment, August 2007), and doesn't think the auto provisions should be a stumbling block:

KORUS FTA Statement by Former U.S. Ambassadors to Korea

Five former U.S. Ambassadors to Korea (their tenures cover the period between 1986 to 2004) have endorsed the agreement in the New York Sun (Securing the Future, Sept 27).

The ambassadors emphasize the political significance of the deal, the potential for the U.S. to be left out of the evolving trade regime in East Asia, and - to a lesser extent - the more traditional trade benefits to the U.S., and especially to their specific audience: New Yorkers.

Their focus suggests it may ultimately be the political benefits, and the threat that the E.U. and others will steal a trade march on us in East Asia, that may persuade a Democratic Congress to support the agreement.  As noted here and here, the overall benefits from the tariff and quota liberalization are likely to be relatively limited for the U.S.

Here's their statement:

Rangle reiterates - renegotiate KORUS FTA

House Ways and Means Chairman Charles Rangle said yesterday that the KORUS FTA needs to be renegotiated:

The Bush administration needs to renegotiate the free-trade agreement with South Korea to address the concerns of automakers and unions, Rangel said.

Peru-U.S. Free-Trade Agreement Backed By House Panel (Update2) (Mark Drajem, Bloomberg, Sept. 25).

ITC Estimates of Aggregate KORUS FTA Impacts on the U.S.

The GDP and employment impacts of agriculture and manufactures liberalization under the Korea-U.S. FTA will be "negligible," says the U.S. International Trade Commission (ITC).  The ITC estimates don't include the impacts of services liberalization, and of other elements in the agreement.

US International Trade Commission Review of KORUS FTA Released

The U.S. International Trade Commission (ITC) released its statutorily required study of the Korea-U.S. FTA today.  You can access the report through the ITC's news release post: U.S.-Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects .  This is long - the pdf reader says 392 pages, and it'll take a while to wade through.

The press release is short - here is the full text:

The KORUS FTA and Korean Public Finance

The Koreans expect to see tariff revenues drop by about 860 billion won (or about $926 million) each year in the short to medium term, once the FTA with the U.S. becomes effective.  But once the growth induced by the agreement takes hold, other tax revenues should increase by enough to offset the tariff impact: Tax revenues related to Korea-US FTA to decrease 860 bil. won annually (Korea.net, Sept 16, 2007):

Korea's Finance Minister to Lobby for FTA in U.S.

The Chosun Ilbo reports: Fin Min to Rally Support for U.S. Congress Approval of FTA (Sept 13, 2007):

Finance Minister Kwon O-kyu plans to rally support for a U.S. congressional approval of Seoul's free trade agreement with Washington.

After attending an annual IMF general meeting for three days from Oct. 20 in Washington, Minister Kwon is scheduled to hold roundtable meetings there and in Chicago with related authorities and officials from key U.S. research institutes and businesses.

During the meetings, the minister is expected to explain how the Korea-U.S. FTA would benefit both economies, seeking U.S. policymakers' and businessmen's support in passing the bill.

South Korean politics

Bruce Klingner of the Heritage Foundation surveys the political landscape in South Korea: South Korea’s Mercurial Political Landscape (Sept 12, 2007).  The Koreans are in the middle of a Presidential election campaign which should culminate in December, and face elections for the National Assembly next Spring.

Not a lot specifically about the FTA, but a lot about general trends in public opinion, Korean politics, and the dynamics of the Presidential contest. 

Korean legislators request "probe" of KFTA

Eighty-two members of Korea's National Assembly have requested a review of the FTA to see if it really does meet Korea's needs: Lawmakers seek probe of free trade deal with U.S. (Yonhap News, Sept 11, 2007):