The Kim Chee Gets Deeper
I have been posting a lot about trade policy, but visits to Washington always bring this out. Regular readers know that I support approval of the free trade agreements with South Korea, Colombia and Panama. At the National Conference of District Export Councils (I chair the council for Hawaii and the American Pacific territories), I heard an expert panel conclude last Wednesday that the FTAs will not move unless President Obama tells the Congress that he wants them passed. Korea’s ambassador to the United States told us that the Korea FTA is expected to generate 240,000 American jobs, so one would think that the Administration would have at least a mild interest. The panel felt that the U.S.-Korea FTA had the best chance of moving quickly and could pass by mid-2010. Good news considering the competing EU-Korea FTA seems on a fast-track for approval in Europe.
Clunkers for Korea?
Those hopes were dashed the next day. U.S. Trade Representative Ron Kirk announced that the Obama Administration wants to re-open the U.S.-Korea agreement to get a better deal for U.S.-produced autos to enter the Korean market. The current FTA draft is not perfect (have you ever seen a perfect agreement of any sort?), but it promises one of the largest openings of trade ever across the Pacific. U.S. industries, workers and consumers stand to benefit immensely from this FTA, but we are now going to hold it up, and perhaps kill it, to support one of our country’s dying and least competitive industries. Now, let’s suppose that Amb. Kirk succeeds in re-negotiating the agreement to do wonders for U.S. automobiles. Who is likely to benefit? Are we likely to see Korean streets filled with Detroit iron? Or are we more likely to see Mercedes and BMWs built in non-union plants in the South heading for the Korean market? I think so. And I think the Administration knows this. That means the sole reason to re-open the FTA is to pander for UAW votes in the next election. This apparently trumps 240,000 jobs.
And it gives our European competitors, including EU car companies, an edge in the Korean market because their FTA with Korea will beat us to the market.
