The US and South Korea are working on a revised free trade agreement that would differ somewhat from the original terms negotiated by George W. Bush’s Administration. It appears that President Obama would want to announce this reworked deal at the G-20 summit in Seoul this week. The plan would be to submit the free trade pact to Congress next year, when Republicans control the House.
Democrats in Congress particularly disfavor the barriers to South Korean markets for the auto and beef industries in the agreement. Republicans, backed by financial services groups and the Chamber of Commerce, support the agreement as written. White House press secretary Robert Gibbs said last week that he would want to amend the provisions on automobiles, and Max Baucus, who would control the Senate Finance Committee through which this agreement would have to go, wants all restrictions on beef exports lifted. An usual cross-border coalition has taken root:
Democrats have been skeptical of claims that the deal will create jobs. In a joint letter last month to Mr. Obama and Mr. Lee, 20 House members and 35 Korean lawmakers called for strengthening health, labor and environmental standards in the agreement, echoing concerns raised by the A.F.L.-C.I.O. But neither government seems to want to revisit those terms.
Republicans broadly support the deal the Bush administration negotiated. “Not only does the Korean market offer excellent growth prospects for American firms, but a free-trade agreement with Korea will have huge foreign policy and national security benefits in Asia,” said Clayton K. Yeutter, who was the trade representative from 1985 to 1989, under President Ronald Reagan.
The Washington Post asserts that this agreement would throw sand in the gears of Chinese dominance. Under this theory, the fact that South Korea doesn’t have much of a trade surplus with the US is immaterial; they indirectly support the wide Chinese trade gap by shipping half-finished products to China for them to complete at a lower cost. The article never says how a free trade agreement would crack down on that, however.
This is going to be a very tough sell in Congress, but because it represents a possible point of agreement between Obama and the Republicans, I could see him going for it. There are plenty of Southern states ravaged by the flight of manufacturing jobs, however, states which have Republican representatives, that I don’t think anyone should assume lockstep support for such a policy.