As governor, U.S. senator, and a private citizen, I’ve had the pleasure of visiting our true allies in South Korea on many occasions, pursuing economic development opportunities and getting to know many leaders in Korean business, government, and cultural affairs. I have always been impressed with the vitality of South Korea and the energy, knowledge, and resourcefulness of their enterprising people. Standing in the booming metropolis of Seoul or visiting the fantastic opportunities of the new Incheon Free Economic Zone, it is difficult to imagine that a mere 50 years ago South Korea was an impoverished nation ravaged by decades of war and occupation. Today, South Korea is the 10th largest economy in the world and America’s 7th largest trading partner, fantastic accomplishments of which the South Korean people are rightfully proud.
The United States and South Korea now have an opportunity to strengthen our close alliance and to reap even greater economic benefits for the people of both countries. The Korea-U.S. Free Trade Agreement ("KORUS FTA") was finalized last year but has yet to be approved by Congress. Once in force, the KORUS FTA will abolish 95% of tariffs for industrial and consumer goods within three years and will end most remaining tariffs within ten years. While not perfect, almost two-thirds of U.S. agricultural exports to Korea will become duty-free immediately. Korea has historically imposed tariffs twice as high as the U.S. subsequently causing the U.S. to suffer a trade deficit with South Korea as high as $16 billion in 2006. This agreement is an opening for the U.S. to level the playing field by greatly boosting our own exports that have widespread benefits to our economy. With a GDP of $1.2 trillion and a population of almost 50 million, South Korea is a strong market for U.S. goods and services.
Twenty years ago President Ronald Reagan observed that "South Korea has been a brave, free world outpost on the border of a hostile northern neighbor." That repressive, communist North Korea is still a danger. Meanwhile, the People’s Republic of China has grown in influence with increasing economic and military strength. These days South Korea is trading with China, Japan, and India. These countries are pursuing regional trade agreements that will influence relations and gain market share in South Korea at our expense if we fail to act in approving KORUS FTA. It will be a slap in the face of a trusted ally in increasingly important Asia. It is not in the interest of our country to turn our back and become less relevant and less engaged when this agreement has so much economic and geopolitical promise for our future.
With so many positive results for American trade, why hasn’t the KORUS FTA been approved by Congress? The short answer is opposition from an increasingly protectionist Congress and union leadership. The KORUS FTA includes the stronger, enforceable labor and environmental standards demanded by many in Congress as part of the 2007 Bipartisan Trade Deal, which was to have resolved the on-going concerns with free trade agreements and clear the way for passage of outstanding agreements with Columbia, Panama, and South Korea. Some in Congress, however, are still refusing to approve the agreement, mostly based on two sore spots: automobiles and beef.
Unions and some automakers complain that the KORUS FTA insufficiently ensures increased sales of American cars in South Korea. But the deal does immediately abolish tariffs on most cars and trucks and establishes a high-level Auto Working Group to monitor and enforce provisions against non-tariff barriers. These changes will level the playing field on autos significantly. The onus will then be on the U.S. auto industry to increase sales by proving their worth to South Korean consumers.
Beef is proving to be the most immediate barrier to approving the KORUS FTA, as some representatives of rural districts are vowing to block the agreement unless South Korea reverses its restrictions on American beef imports. These restrictions are being negotiated in a separate process and can and should be resolved soon. This dispute cannot be allowed to derail the benefits to be realized from implementation of the KORUS FTA.
South Korea has been a long-time, stalwart ally of America, and their newly-elected President Lee Myung-bak, is a proponent of a strong relationship with America and of free trade. His overwhelming victory in last year’s election is a sign of support for free trade in South Korea. The U.S. Congress should uphold America’s end of this relationship and move forward to ratify this agreement which will create more jobs and opportunities for Americans.