An Opportunity in the U.S. Elections, but It’s Not a Done Deal for the KORUS FTA

Troy Stangarone is the Director of Congressional Affairs and Trade for the Korea Economic Institute. His views are his own.

With the Seoul G20 Summit rapidly approaching on November 11-12, 2010, expectations are high that the Korea-U.S. free trade agreement (KORUS FTA) is finally nearing the home stretch. The recent elections in the United States seem to have created a more favorable climate in the House of Representatives for agreement and all that remains is for the two sides to iron out their differences this week in Seoul to finally send the agreement to Capitol Hill for passage early next year. However, the overall picture may not be that simple.

While the November elections have created an opportunity for the KORUS FTA, it is still necessary to reach a deal in Seoul this week on the United States’ remaining concerns on beef and autos. Without any new understanding on these issues the opportunity presented by the change in House leadership will have little impact on the agreement’s prospects. With this in mind, there are a series of additional implications for the KORUS FTA from the November 2, 2010, election.

The House Leadership Should Be More Favorably Disposed to the Agreement

When the KORUS FTA was first concluded in 2007, a united Democratic leadership came out against the agreement. In contrast, the new Republican leadership, despite a wide range of policy disagreements with the Obama administration, has expressed a desire to see the KORUS FTA passed. This may be one of the few areas where bipartisan cooperation is possible over the next two years.

The Election Did Not Change the Dynamics of the Current Talks

The change in control of the House will have little impact on the current discussions taking place between Seoul and Washington, DC. While Sander Levin will no longer be the chairman of the House Ways and Means Committee, David Camp, the incoming chairman is also from Michigan. He may not seek the same deal Levin might have, but the United States will still need something on autos to get the KORUS FTA through Congress. The dynamics in the Senate, where beef has been a major issue, were largely unchanged by the election.

The Tea Party is Not Protectionist

One of the early concerns about trade in the next Congress was the potential views of Tea Party candidates. Recent polls have indicated that those who identify themselves as supporters of the Tea Party oppose trade at about the same rate as union members. However, of the thirty-nine Tea Party candidates (there were still eight undecided races with Tea Party candidates at the time this article was written) who won House seats on election night, the positions are fairly evenly divided between those for and against trade. In the Senate, all of the winning Tea Party Senate candidates support free trade. Of the total Tea Party candidates who ran in the elections, 64 percent of those who had taken a stand on trade could be said to be pro-trade.

Congress as a Whole May Be More Anti-Trade

Despite the better than expected views on trade by Tea Party candidates, Congress as a whole may become less reliably pro-trade. The positions of many of the incoming candidates on trade are unknown. However, we do know how current members who lost voted on trade. Just by looking at races won by Tea Party candidates, there is a net loss of six known pro-trade votes in Congress.

Democratic Votes Will Still Be Needed to Pass the KORUS FTA

Despite a Republican majority in the House, it is unlikely that the KORUS FTA could be passed on a party-line vote. Over the last decade, during which the Republicans controlled the House the longest, they averaged 198 votes for FTAs. The Obama administration has said that it wants broad support for the agreement, not to pass it by a handful of votes. This means significantly more Democratic votes than the twenty needed for passage will be required–another reason why the beef and autos issues need to be addressed.

The KORUS FTA Could be Passed by the Colombia FTA

When the KORUS, Colombia, and Panama FTAs were originally concluded there was strong Republican support for moving the Colombia FTA ahead of the KORUS FTA despite Korea’s greater economic potential as an FTA partner. If the two sides are unable to strike a deal in Seoul this week, there is the potential for Republicans to push to make Colombia a priority over Korea. The concerns over the Panama FTA are nearly resolved and this FTA could pass KORUS in the legislative queue as well if a deal is not struck in Seoul.

The Other Legislative Battles

While the Tea Party has proven to be more pro-trade than many realized, it is disinclined to compromise. If many of its members hold firm in their positions, the KORUS FTA could become caught in a larger battle over government spending, the deficit, and taxes even if the Tea Party supported the agreement.

Seizing the Opportunity

This November may be the best opportunity for the KORUS FTA to finally be passed in Congress. If a successful agreement can be reached in Seoul, it could see passage in the first half of 2011. That window will likely not stretch into 2012 when both countries have presidential elections. Falling short at this point could cause the FTA to be delayed until 2013 or 2014. However, if the two sides are successful this week, there is a strong possibility that the KORUS FTA will be sent to Congress in 2011.