August 10, 2010
“[Korea-U.S. Free Trade Agreement] is the right thing to do for our country…It will strengthen our commercial ties and create enormous potential economic benefits and create jobs here in the United States, which is my number one priority.”
—President Obama, June 26, 2010
More than three years have passed since a bilateral Free Trade Agreement (FTA) was negotiated between the U.S. and our Asian ally, South Korea. Though President Obama recently expressed interest in moving forward with Congressional approval, Democrat leaders on Capitol Hill show no real sign of moving the U.S.-South Korea FTA, which would be a real, no-cost economic stimulus. Instead, the Democrats continue to pay lip service to job growth and economic expansion yet remain motionless on one of the easiest ways reach those goals—implementing the U.S.-South Korea FTA.
U.S.—South Korea FTA: On June 30, 2007, U.S. trade officials and the government of South Korea signed the U.S.-South Korea FTA. 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 South Korean market and ensuring fair treatment of U.S. firms. Finally, U.S. companies would be granted greater access to the South Korean government procurement market. Currently, according to the Heritage Foundation, U.S. exports to South Korea face higher tariffs and tariff rate quotas than do South Korean exports entering the U.S. The trade deal would thus help level the playing field and benefit U.S. companies, workers, and families.
The Numbers Are In: The U.S. Chamber of Commerce released a report in May 2010 analyzing the economic effects of our 14 existing Free Trade Agreements, concluding the FTAs themselves generated $304.5 billion in output during 2008 and supported 5.4 million jobs. The study employed economic models used by the International Trade Commission and the World Bank and determined that “U.S. merchandise exports to our FTA partners grew nearly three times as rapidly as did our exports to the rest of the world from 1998 to 2008.” This data reinforces support from the National Association of Manufacturers, which recognizes the “tens of thousands of new manufacturing jobs that will be created as a result of increased exports,” and from the U.S. Department of Agriculture, which estimates $1.9 to $3.8 billion in additional exports for American farmers if the U.S.-Korea FTA is approved. Congressional Democrats and their union allies appear to be the only ones not endorsing the obvious economic benefits of this FTA.
Global Trade Waits for No One: While the U.S.-Korea FTA has languished in Congress, South Korea has negotiated and implemented free trade agreements with India, Chile, the European Free Trade Area, and ten south-east Asian countries. Moreover, it is expected that Korea will finalize and sign FTAs with Peru and the European Union by the end of 2010. With trade negotiations underway between Korea and eight other nations, including Canada, the U.S. cannot afford to allow the benefits of expanded trade to accrue to so many other players in the global economy. The increased pace of global commerce means South Korean consumers have many other choices to satisfy the needs of economic development. As Rep. Wally Herger (R-CA), member of the House Ways and Means Trade Subcommittee noted, “Not only are we missing an opportunity to boost our struggling economy, we are putting jobs at risk as our foreign competitors move to lock in agreements that will put U.S. exports at a significant competitive disadvantage.”
Relations Suffer With Protectionism: South Korea has the misfortune of sharing a border with the repressive, nuclear-armed North Korea. Additionally, China is becoming more assertive in the region with less-than-transparent economic and military motives. This geopolitical dynamic demands the full range of support from the U.S. for South Korea, a tried and true ally. In the absence of that support, Beijing and Pyongyang have no problem intimidating our democratic, free-market partner, putting Seoul’s security and economic prosperity in a precarious position. While Democrats dither on the Korea-U.S. free trade deal, not only does U.S. economic competitiveness suffer, so too does the standing of America’s reputation in the global community.
Rather than stubbornly slogging on with their failed economic policies of taxing, spending, borrowing and bailouts, Democrats should heed to commonsense. Simply approving the 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.
For additional information, contact:
The House Republican Conference Policy Office