Friday, February 19, 2010

Time to Stop Paying Those KORUS Lobbyists

The US-Korea FTA is the most economically significant US trade agreement since NAFTA. The Agreement would help the United States pull out of the Great Recession by expanding American firms' access to the Korean market and making high quality Korean goods (think Samsung, Kia, Hyundai, LG, etc.) cheaper here at home. It also would cement ties with a powerful, longstanding ally in the Asian region.

And it's dead as a doornail for the foreseeable future.

The reasons for my broad proclamation have been pretty evident for a while now, and I (and many others) long ago predicted that KORUS wasn't going anywhere in 2010. Yet some optimists - including the good folks in the US business community and the Korean government - have still been lobbying hard for the agreement's near-term passage, particularly after the EU announced its own FTA with South Korea and President Obama announced his new National Export Initiative. Unfortunately, two recent events involving the United States Trade Representative should finally kill any remaining optimism about KORUS.

Before I get to the events themselves, some perspective is necessary: USTR Kirk is not some random congressman from Detroit or some silly Senator from Ohio.  He also is not charged with ensuring passage of domestic health care, energy or tax legislation.  He is the the chief international trade negotiator (and cheerleader) for the United States of America - the world's largest economy and (well, at one time) the global gold-standard of free trade and free markets.  Now, with that in mind, on to the show.

First, we have Kirk's utterly depressing statements about why the brand new Trans-Pacific Partnership (TPP) Agreement is an administration priority:
Speaking at the USDA Annual Outlook Forum, Kirk said members of Congress “are more open and receptive” to the idea of creating a trans-Pacific agreement because it could be written from scratch.

The Trans-Pacific Partnership comes “without any of the biases of the three [agreements] under consideration,” he said. Kirk added members of Congress also like it because it would take 18 to 24 months to develop and would not come up for approval until after the 2010 elections.
Feel the excitement!  As Cato's Dan Ikenson (who found the quote above) aptly notes, "Kirk's planning to hang his trade expansion hat on some future trade agreement that’s still in the conception phase and years away from a shot at reality, while giving up on the already-signed agreements with Korea, Colombia and Panama because those agreements are too much of a burden politically for Congress, who would prefer to start from scratch. That’s trade leadership from the Obama administration!"  Indeed.  I'd only add that when the USTR's top FTA selling point is that it'll take forever to complete and thus is politically convenient, you know you're screwed.  Royally.

Second, there's news today of Kirk's speech on KORUS to the American automobile industry.  Although I'm unsure why, given taxpayers' stake in two of the Big Three, he didn't just head to the Treasury Department, Kirk instead went to Detroit to plead his case, and boy, did he ever play nice.  Here's Reuters with the news:

President Barack Obama will not submit a free trade agreement with South Korea to Congress for a vote until Seoul does more to open its auto market, the top U.S. trade official said on Friday.

"I know there is concern, especially in this part of the country, about the U.S.-Korea FTA," U.S. Trade Representative Ron Kirk said in a speech to the Detroit Economic Club.

"We have let Korea know that we will have to work together so we can show the American people that U.S. cars will be able to compete on a level playing field in Korea," Kirk said.

The speech showed how little progress the administration has made toward resolving differences with South Korea since Obama took office over one year ago.

"Given the history of Korean protectionism in the auto sector, there are questions about whether the FTA will establish a level playing field for U.S. automakers and automotive workers," Kirk said....

He extolled the overall benefits of the trade deal, but said his office still had no plan for fixing concerns that have blocked approval of the deal for nearly three years.

"We at USTR are hard at work to develop ideas for addressing these concerns, and we will be consulting closely with members of Congress and other American stakeholders as we move down this path," Kirk told the group....

In other words, the Obama administration's litmus test for passage of KORUS will be the express approval of the agreement's chief opposition, and USTR hasn't even begun to develop a way to pass that test.  Kirk might as well have said, "Don't worry, carmakers (and unions), the FTA ain't going anywhere until you say the word."  And that approval is never, ever going to happen.  Why, you ask?   Well, Ford and Chrysler are probably the biggest KORUS opponents, not because of Korean market access (despite their claims), but really because the FTA would eliminate the 25% US tariff on Korean imports of light trucks and SUVs (i.e., Kias and Hyundais that are already dominating the US market).  And because the FTA provision that would eliminate the US truck tariff isn't going anywhere (it is a "free trade" agreement, afterall), neither is KORUS.  It's that simple.

So, KORUS supporters, it's time to shelve the public optimism and start looking elsewhere.  This deal is dead... well, at least until the federal government gets out of the car business, or the GOP regains some power in Washington.

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