In an interview with Bloomberg Business Week last Thursday, President Obama stated that he would like to complete pending trade agreements with South Korea, Colombia, and Panama, but there’s a catch. Although his State of the Union Address provided a potentially powerful strategic rationale for passing these free trade agreements (FTAs) as part of the administration’s effort to double exports over the next five years, the president’s statement in his interview with Bloomberg was actually a step backwards. By adding that “with respect to South Korea, there is some concern that, although the deal was good for our telecommunications and our finance system, that our auto exports to South Korea are still subjected to a lot of nontariff barriers,” the president offered a tactical explanation why his administration has chosen NOT to move forward with the agreement rather than making strategic arguments for why the Korea-U.S. (KORUS) FTA is in the national interest.
The president could have mentioned that Korea has also signed an FTA with the EU, which, if ratified prior to the KORUS FTA, will actually put U.S. firms at a disadvantage vis-à-vis European competitors in the Korean market. Or he could have mentioned that Japan, China, and South Korea are discussing the possibility of a regional FTA, which would in effect form an Asian trade bloc, to the exclusion of the United States, and that KORUS could help mitigate the effects of such a development. Or he could have said that China has used preferential trading arrangements as a means by which to promote itself as the center for economic growth (in the post-Google U.S.-China relationship, the need for collaboration with Asian partners is even more important), but the KORUS FTA would set a benchmark for trade liberalization in Asia that would keep the United States in the game as part of the economically most vibrant region in the world. Or he could have mentioned that failure to pass the KORUS FTA (especially in advance of the president’s visit to Seoul for the G-20 this November) would constitute a setback to the comprehensive strategic alliance with South Korea announced in a U.S.-ROK Joint Vision Statement at the White House in June of 2009. Evan Feigenbaum and Bob Manning mention the KORUS FTA as one of the types of engagement needed to sustain American credibility and influence in Asia.
Instead, the president gently reminded us in last week’s Business Week interview that there is formidable political opposition from labor unions and some portions of the auto sector, a core Democratic constituency that would prefer not to see these FTAs forwarded to Capitol Hill. Given the complexity of health care, climate change, and all the other issues on the president’s congressional agenda, it is understandable that the administration might hesitate to tell the South Korean side what problems it needs to address in the automobile provisions of the FTA. After all, the FTA will only pass Congress if the White House shows political leadership.
Consideration of the FTAs should not be a solely Democratic game. The president has tied jobs directly to increased exports, and Korea happens to be one country where labor costs and rules make off-shoring prohibitive; in fact, a KORUS FTA might possibly result in increased Korean investment in the United States. If Republicans truly want to show that they are not reflexively opposing the president, and are open to the president’s calls for bipartisanship, they should show a willingness to take up FTAs as a starting point for cooperation.