Old friends, reinvigorated alliance
Passage of a trade pact with S. Korea would bolster the United States' standing in the region
Maintaining the U.S. strategic position in Northeast Asia depends on strengthening and renewing the U.S. relationship with South Korea. Besides enhancing regional stability, Korea offers the United States a burgeoning market and growing investment opportunities.
Since the Guangju Massacre in 1980 (see "Look East," March 11), there has been a distancing in traditionally close U.S.-South Korea relations. Former South Korean President Kim Dae-jung and President George W. Bush had a poor relationship. Bush was opposed to Kim's conciliatory Sunshine Policy, which sought greater interaction with North Korea. Kim's successor, Roh Moo-hyun, has carried on the Sunshine Policy. This split accounted for differences in the U.S.-South Korea approach to the Six Party Talks with North Korea. Initially, the United States sought regime change and refused to talk one-on-one with North Korea. South Korea feared the collapse of the North and urged direct talks.
Moreover, younger South Koreans are not as enamored with the United States as their parents and many seek the withdrawal of U.S. forces from Korea. Since the establishment of diplomatic relations with China in 1992, South Korea has often appeared more concerned with developing its relationship with Beijing rather than with Washington.
Still, timely opportunities exist to improve U.S.-South Korea relations. Next week's South Korea presidential election likely will be won by the Grand National Party candidate, Lee Myung-bak. At the time of this writing, Lee had a solid lead in various polls. His victory could help lead to a GNP victory in the 2008 National Assembly elections as well. Unlike Kim's or Roh's parties, the GNP traditionally holds positions closer to those of the United States.
Passage of the Korea-U.S. Free Trade Agreement by both the U.S. Congress and the Korean National Assembly would offer both strategic and economic advantages to the United States.
"The FTA can become a foothold, a base from which the U.S. will be able to engage directly in the region's economic and security-related activities," said Il SaKong, chairman and CEO of the Institute for Global Economics and former South Korea Minister of Finance. Il is also a member of the East-West Center's Board of Governors.
The agreement represents thinking strategically consistent with other FTAs. The U.S.-Singapore free trade agreement allows the United States to radiate its influence through ASEAN, helping to dilute growing Chinese influence. The U.S.-Bahrain FTA serves as an anchor for promoting U.S. influence in the Persian Gulf.
Jitsuro Terashima, president of the Mitsui Strategic Research Institute, said "Asia will account for 50 percent of global GDP by 2050." Situated in the center of Northeast Asia and energetically promoting itself as the hub of a more vibrant, multilaterally focused region, an FTA with Korea offers the United States the advantages that Il suggests. Trade and access to the U.S. market is a proven instrument of U.S. foreign policy.
On the other hand, defeat of the free trade agreement would hinder U.S. leadership and credibility throughout the region. Its failure will create a void that China would quickly seek to fill.
The economic advantages of an FTA are clear. The Korean economy is the world's tenth largest, and Korea is the United States' seventh-largest trading partner. Korea is the sixth-largest importer of U.S. agricultural goods. In 2006, two-way trade was $78 billion; Korean investment in the United States was $16.7 billion, with U.S. investment in Korea at $36.6 billion. It is estimated that both nations' economies will grow by $10 billion annually due to greatly reduced duties and tariffs on two-way trade.
As a result, U.S. exports of consumer and industrial products could increase by 54 percent and agricultural exports could increase by 200 percent, yielding special benefit to grains, produce, citrus, beef and pork, according to the International Trade Commission. The free trade agreement would provide greater transparency and opportunity to participate in the financial services market, own telecommunications facilities, and enhance intellectual property rights and enforcement. An FTA likely would increase Hawaii exports of tropical fruits, nut products and professional services to Korea.
Congressional objection to passage of the FTA stems from some Democrats' generally negative view of globalization. It is bolstered by American auto manufacturers' Chrysler and Ford, who maintain that free trade would not guarantee access to the Korean auto market. While Korea has offered to resolve such U.S. automobile industry concerns by removing the 8 percent tariff on passenger cars, changing the auto tax system on large engines and modifying emission and other standards, Chrysler and Ford maintain that nontariff barriers will remain and seek a guaranteed percentage of the market.
An additional obstacle to passage is beef. Once the third-largest importer of U.S. beef, Korea now allows only the import of boneless beef due to lingering concern about mad cow disease. The United States seeks complete liberalization of U.S. beef in the Korean market.
With President Roh's influence, the National Assembly is set to pass the free trade agreement. The principal Korean objection came from Korean farmers who did not welcome international competition. Roh expended great effort in winning over farmers. Moreover, the Korean government has set up a fund to financially assist farmers who suffer from increased trade.
Congressional passage of the FTA guarantees the U.S. strategic advantage that China craves; economically China, Canada and the European Union are set to pounce if the United States does not act now.
Bill Sharp teaches domestic and international politics of East Asia at Hawaii Pacific University. He writes a monthly commentary for the Star-Bulletin.