When Everyone Else Lowers Tariffs

By October 28, 2008Trade

Canada negotiates a trade deal with the European Union. China signs a free trade agreement with Singapore. Australia says the ASEAN-Australia-New Zealand Free Trade Agreement negotiations are its most comprehensive trade talks ever.

The EU and South Korea are also talking, the Asian Wall Street Journal observed today in an editorial, “Trading Partners.”

On the sidelines of a Europe-Asia summit this weekend, President Lee Myung-bak and European leaders Nicolas Sarkozy and Jose Manuel Barroso affirmed their commitment to finalizing a free-trade agreement this year. Negotiators still face hurdles on issues like country-of-origin rules and car imports, but both sides are optimistic about reaching a deal.

The EU is already Korea’s second-largest export destination after China, and in overall terms the EU and U.S. are almost neck-and-neck. EU-Korea trade in goods was valued at 64 billion euros ($80 billion) last year, compared to $82 billion in U.S.-Korea trade.

The irony is that Europeans started negotiating with the Koreans in May 2007 not least because the EU was afraid of losing out as Korea signed a trade pact with America. Yet that U.S. agreement is stalled in Congress as Democrats bow to their union supporters.

We’ve made the same point before (here). The United States can choose to abandon tariff-lowering negotiations unilaterally if it wants, but other countries will continue to negotiate and close deals that leave U.S. companies, manufacturers and farmers increasingly uncompetitive.

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