On November 18, 2009, President Obama arrived in South Korea, the final stop on his Asia trip. Although free trade creates jobs without spending taxpayer dollars, approving the 2007 U.S.-South Korea Free Trade Agreement (FTA) is apparently not on the Democrats' agenda for 2009. Enacting the agreement would create jobs in the U.S. and lower consumer prices at home, thus expanding family budgets during a recession and providing a no-cost stimulus that would actually work.
U.S.- South Korea FTA: On June 30, 2007, the governments of the U.S. and South Korea signed the U.S.-Korea FTA. Over two years later, the deal still awaits the approval of Congress. The trade deal would allow 95 percent of bilateral trade in consumer and industrial products to become duty-free within three years. Most remaining tariffs would be eliminated within 10 years of enactment. Additionally, about two-thirds of U.S. agricultural exports would enter South Korea duty-free within three years. The FTA would also boost the ailing U.S. financial service sector, increasing access to the Korean market and ensuring fair treatment of U.S. firms. Finally, U.S. companies would be granted greater access to the Korean government procurement market. Currently, U.S. exports to Korea face higher tariffs and tariff rate quotas than do Korean exports entering the U.S, according to the Heritage Foundation. The trade deal would thus help level the playing field and benefit U.S. companies, workers, and families.
Stimulating the U.S. Economy: According to the U.S. International Trade Commission, enacting the FTA would add, at a minimum, $10-12 billion to U.S. GDP per year, as well as $10 billion in additional annual merchandise exports to South Korea. The FTA, by further opening the Korean market to U.S. goods and services, would create jobs in the U.S. and drive down the cost of consumer items sold in the U.S., fueling greater consumer spending and economic activity in the U.S. marketplace. The agriculture industry would especially benefit from the FTA (click here to see how the USDA estimates farmers and ranchers will be affected state-by-state). A U.S. Chamber of Commerce study suggests that failure to implement the trade deal would result in a loss of 345,000 jobs and over $35 billion in lost exports.
Lagging Behind Competitors: While the U.S.- South Korea FTA has languished on Capitol Hill since 2007, our major trading competitors have rushed into the Korean market. The European Union (EU) and South Korea concluded negotiations for a comprehensive FTA in July 2009, and the deal is expected to be implemented in 2010. The Canadian government has indicated that its negotiations for a Korea FTA are "well advanced." South Korea ratified an FTA with India. If Congress does not quickly approve the U.S.-Korea FTA, other exporters will enjoy a significant competitive advantage over U.S. companies. The resulting decline in U.S. exports to South Korea will ultimately cause U.S. companies to slash jobs.
Affirming an Asian Ally: South Korea is an important economic partner and strategic ally, and the U.S. stands to benefit from deeper ties with the country. In 2008, U.S. exporters sold about $40 billion in products to Korea. The year before, U.S. companies sold nearly $13 billion in services in South Korea. There is growth potential for additional economic activity in Korea, but U.S. companies risk losing market share without the free trade pact in effect. South Korea is also a critical security partner in a volatile region. The Heritage Foundation notes that South Korea has recently worked closely with the U.S. in countering North Korea's nuclear program and is sending civilian and military personnel to support the coalition mission in Afghanistan for the first time since 2007. Passing the FTA would reward South Korea's recent support for U.S. foreign policy priorities and demonstrate continued U.S. engagement and leadership in North East Asia.
Continued trade protectionism will only prolong the current economic downturn. Congressional Democrats clamor for a second "stimulus" by Christmas and President Obama plans a White House "jobs summit" in December, yet simply approving the already signed U.S.- South Korea FTA will provide a no-cost stimulus to the U.S. economy and create jobs, while also strengthening a key security relationship in Asia.