A U.S.-Korea free trade pact would promote prosperity and regional stability
POSTED: 1:30 a.m. HST, Feb 14, 2011
Maintaining the U.S. strategic position in Northeast Asia depends on strengthening and expanding the U.S. relationship with South Korea.
Besides enhancing regional stability and securing peace, a free trade agreement (FTA) with South Korea would offer the U.S. wider access to the world's 15th largest economy. Korean investors would be able to more easily invest in the U.S. and create jobs. Trade between both countries would be enhanced by a 95 percent reduction in tariffs.
Korea is an export-driven economy. As its exports move up the value added chain, it needs unfettered access to more and more markets to ensure economic growth.
South Korean President Lee Myung-bak has tirelessly lobbied in both Korea and the U.S. for passage of the Korea-U.S. FTA.
The hallmark of the Obama administration's foreign policy has been enhancement of the U.S.'s relations with the Asia-Pacific region. In his 2011 State of the Union speech, the president advocated enactment of the Korea-U.S. pact.
U.S. opposition to a Korea-U.S. free trade agreement has been due to slow U.S. economic growth, fears that an FTA would send jobs to Korea and block U.S. beef exports, and automobile industry concern that an agreement will add to the imbalance in the automobile trade.
In his speech, President Barack Obama pointed out a Korea-U.S. FTA would add 70,000 American jobs.
The Southwest Farm Press reports the National Cattlemen's Beef Association plus 60 other food and agricultural concerns representing nearly all sectors of the agricultural economy now support FTA passage.
The United Auto Workers and Ford Motor Co. also now support passage.
The U.S. already has 17 free trade agreements in force. The U.S.-Korea FTA was signed in June 2007 but has not been ratified by the U.S. Congress. In the interim, the European Union and Korea have signed an FTA. South Korea already has agreements with Chile, ASEAN Plus 3 and Singapore; Canada and Korea are in the midst of negotiating an FTA. In his State of the Union speech, Obama also advocated passage of FTAs with Colombia and Panama.
According to the U.S.-Korea Business Council, non-passage of the FTA would result in:
» A loss of $20.3 billion in U.S. exports to the South Korea.
» A loss of $40.4 billion in the U.S. gross domestic product.
» A loss of 345,017 U.S. jobs. The average salary of jobs in America created through Korean investment is $64,300.
Specific losses to Hawaii due to non-passage of the U.S.-Korea FTA would include:
» $18 million in lodging and food service revenues.
» $11 million in retail revenues.
» $7 million in construction revenues.
» $8 million in technical services revenues.
» $7 million in finance revenues.
Passage of the U.S.-Korea FTA would also encourage Korea, Japan and China to pursue a triangular free trade framework. This would enhance a wider Pacific Basin community of free trade such as the Trans-Pacific Partnership, in which both the U.S. and Japan have expressed interest in joining.
In the end, all four parties' mutual benefit would be enhanced by increased stability and reduction of tension in Northeast Asia.
Lee-Jay Cho is chairman of the Northeast Asia Economic Forum and former president of the East-West Center. Bill Sharp teaches East Asian politics at Hawaii Pacific University and hosts "Asia in Review," a weekly TV show devoted to discussion of contemporary Asian affairs.