As Korea Trade Agreement Waits, U.S. Influence Ebbs in Asia

By October 26, 2010Trade

Ambassador Ron Kirk, the U.S. Trade Representative, and his Korean counterpart, Trade Minister Kim, are meeting in San Francisco today to discuss issues surrounding the automotive and beef provisions in the U.S.-Korea free trade agreement. You will recall that this summer, President Obama met with Korean President Lee and announced the two countries would discuss outstanding issues on autos and beef where the U.S. government had some concerns.

President Obama set the November 11-12 2010 G-20 meeting in Seoul as the date by which these discussions should be concluded and an agreement reached for submission to Congress.

So, there’s a lot riding on the meeting today between Kirk and Kim. As I noted yesterday in a Reuters article, no one expects the two Trade Ministers to come to an agreement today – but it’s a great opportunity for them to have an in-depth, frank and open discussion on what needs to be done and how it can be done. This meeting will, if past history is any guide, be followed by additional discussions and meetings, leading up to an agreement that President’s Obama and Lee can at some point around the G-20 meetings.

The National Association of Manufacturers certainly encourages the two Ministers to keep talking and moving forward. This agreement is extremely important to manufacturing in America – Korea is one of our largest trade partners and an key export market for our manufacturing products. Manufactured goods are almost two-thirds of all U.S. exports of goods and services to Korea.  I don’t discount the key importance the agreement has to our agriculture and services sectors, but this is overwhelmingly a manufacturing agreement.

There are clear economic consequences if an agreement cannot be reached. On Monday, U.S.  columnist Doug Bandow of the Cato Institute had a piece, “Korea Pact Essential to the U.S.” published in The Australian newspaper. He started off by noting:

US unemployment remains high. China is ever more confident and has displaced America as the No 1 trading partner with leading East Asian states. How have the Obama administration and Democratic congress responded to these challenges? By retreating economically from Asia. The US-South Korea Free Trade Agreement sits unratified in Washington. This policy was remarkable for both its economic and geostrategic folly.

My emphasis. I should note the Australians are racing toward the finish line of their own bilateral FTA with Korea. Bandow continues:

Washington’s influence in East Asia is slowly ebbing. Today, the US-Korea military alliance is outdated. However, Washington can employ American “soft power” access to the world’s most important, advanced, and productive economy to actively engage friendly nations. The US should press for multilateral and regional agreements. Washington already has forged FTAs with Australia and Singapore. The US should move forward and negotiate FTAs with Japan, Taiwan, and ASEAN, the collection of highly trade-dependent Southeast Asian states.

But the start is for the US congress to ratify the pending accord with South Korea. Failing to approve the South Korean FTA is likely to result in permanent economic and geopolitical damage. This would be a high price for the US to pay at any time, but especially when China is rapidly expanding its influence throughout East Asia.

Indeed, as I pointed out from Korea two weeks ago, the attitude on the ground there among senior officials, and in fact all around Asia, is that the “pause” on trade that the United States has invoked over the last three years is becoming increasingly ruinous to America’s ability to compete globally, expand and open markets for our goods and services, and to hold on to our vitally important leadership role in Asia and across the world.

As Bandow argues in his op-ed, more free trade agreements for the United States mean more open markets, more exports, more jobs and more growth – as well as a affirmation of our leadership in Asia and elsewhere. President Obama understands this or he would not have proposed doubling our exports in five years or pushed forward on the Trans-Pacific Partnership.

But, it all begins with passing the pending FTAs with Colombia, Korea and Panama, as well as a strong push for an ambitious Doha Round. How do you reach a destination? It may take time and effort, but you’ll never get somewhere if you don’t ever leave. We’re running late. Time to get going.

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