[Overseas View]Politics threatens a win-win FTA

In the year since South Korea and the United States announced they would pursue a free trade agreement, the political context for the trade negotiations has changed dramatically. There is little evidence that either President Bush or President Roh has the commitment or capacity to gain political backing for an trade agreement at this time. Negotiators rushing to meet the April 2 deadline for submitting an agreement, 90 days before the expiration of U.S. Trade Promotion Authority, are like passengers rushing to board a flight certain to crash due to political failures.
The ambitious timeline for negotiations set when they were announced last January has turned out to be too long, not too short. Political traps have emerged that threaten to kill what otherwise should be a win-win opportunity for both sides. The window of opportunity for a Korea-U.S. trade pact is rapidly and perhaps permanently closing.
A free trade agreement with Korea would be America’s biggest trade deal since the North American Free Trade Agreement, or NAFTA. South Korea is a top trading partner and close security ally of the United States, and emerged from the Asian financial crisis as an Asian economic player well -positioned to capitalize on the benefits of global economic integration. A trade pact would secure a foundation for Korea-U.S. cooperation that goes beyond the security alliance.
The political shake-up in Washington during last November’s Congressional elections has arguably made it more difficult for such legislation to pass the U.S. Congress. A weakened President Bush has shown little willingness to spend political capital on trade agreements. Passage of a pact may be more difficult under the newly elected Democratic Congressional leadership, given the protectionist voices within the party.
South Korea had good reasons for pursuing a comprehensive trade agreement first with the United States and later with Asian neighbors, both to strengthen Korean business opportunities in the United States and because a pact with the United States would serve as a benchmark for ageements with other countries that would aid highly competitive South Korean companies. China’s economic rise imposes pressure on South Korean markets regardless of whether or not there is a trade agreement with the United States. As a strong international economic competitor, South Korea remains poised to gain from a liberalized global economy. But South Korean domestic opposition to a trade pact has gradually risen during the course of the negotiations. Despite apparent efforts on the part of the Blue House to mobilize political support, even former economic officials of the Roh government have come out against the negotiations.
Several weeks ago, Roh Moo-hyun’s constructive presidential and legislative electoral reform proposals were rejected in public opinion polls primarily because Roh proposed them, even though the proposals themselves received public support. It is fanciful to believe that a president with single-digit approval ratings can win over political support for a free trade agreement, no matter what the economic benefits may be.
But most sobering is that no senior Blue House official or other leading private sector group has lifted a finger to make the domestic political case for the agreement. Any trade pact will have a negative impact on some domestic sectors while bringing substantial economic gains to others. But the “participatory government” spent all its time on the negotiations while failing to address concerns of those most vulnerable to economic liberalization at a time when South Korea’s social cohesion is already being threatened by divisions between rich and poor.
The South Korean government has reportedly made internal plans to provide a comprehensive structural adjustment package to aid sectors of the Korean economy that are put at risk by a trade pact, but Roh Moo-hyun has not yet explained how such a package might provide redress to vulnerable sectors within South Korea. The lack of visible effort by the Blue House to provide support to potential “losers” from the agreement is a critical litmus test that the South Korean government has failed. It has failed to both gain public support and manage the political fallout from such an agreement, leaving the United States as the primary object of blame.
Regardless of whether a trade pact passes or fails, the introduction of this issue during a South Korean election year provides too convenient a pretext for political demagoguery misdirected toward the United States rather than South Korea’s own political failures. Rather than take the risks of pursuing the trade package in an uncertain and emotional South Korean political environment, the United States should make clear that the plane must be fixed before it gets on board.
The South Korean and American negotiating teams have worked hard to forge an agreement that ideally would expand our mutual prosperity. Such an agreement may also bolster the longstanding U.S.-ROK political and security relationship. But a political failure of either side to pass the agreement will leave a lasting bitter taste that could negatively affect the overall relationship. Unless political winds again change course, it will be risky to board a flight that may be doomed to failure due to political obstacles in both countries.

*The writer is a senior associate with The Asia Foundation and Pacific Forum CSIS. The views expressed here are personal views. He can be reached at ssnyder@asiafound-dc.org.

by Scott Snyder