[Overseas view]Aid industries damaged by FTA first

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[Overseas view]Aid industries damaged by FTA first

Word that the United States and South Korean trade negotiators have concluded a bilateral free trade pact is welcome news. Trade liberalization serves consumers in both countries by pushing prices down, and by spurring manufacturers to enhance productivity through the prospect of intensified competition. Expanded trade and investment increase occasions for human exchanges of all kinds. And the fact that Washington and Seoul were able to hammer out a mutually acceptable “deal” against the backdrop of strong resistance from special interests in both countries is a heartening reminder that the U.S.-Korea partnership is alive and well.
The upturn in bilateral relations is a particular source of satisfaction, since it is no secret that they have been in the doldrums for several years. The principal reason for this has been the divergence in our respective perspectives on Pyongyang and how to deal with its nuclear aspirations.
Washington has regarded Seoul’s indulgence of North Korea as an impediment to a “united front” in the six-party talks. Seoul, meanwhile, has viewed America’s policy as perverse, counterproductive, and out of step with the approach of the North’s immediate neighbors.
From the nadir in 2003-2004, relations have gradually improved. Recent efforts by both governments have helped.
Within the six-party talks greater unity of purpose has been achieved, no doubt facilitated by the North’s defiant truculence. The U.S. set aside its reluctance to talk directly with North Korea’s representatives, subordinated its hopes for “regime change” to the necessity of negotiations, and focused the bargaining on symmetrical concessions. South Korea, in turn, has adopted tougher tactics in conditioning its provision of aid to the North to concrete steps to implement the Feb. 13 agreement. Whether this will assure progress in the six-party talks remains to be seen, but it has narrowed differences between the U.S. and South Korea.
The troublesome political fallout from U.S. force deployment and military base issues has meanwhile been managed with impressive professionalism: The plans call for moving U.S. forces out of metropolitan areas, relieving domestic opposition in South Korea to the alliance. The United States showed flexibility in accommodating Korean preferences in the timing of major changes to operational control arrangements. The reduction of U.S. force levels will be accomplished gradually; if anything, it is long overdue.
In this context, negotiations over the bilateral free trade agreement offered a timely opportunity to broaden the framework of bilateral cooperation. It constitutes the most significant free trade agreement signed by the U.S. in more than a decade. Domestically, it provides demonstrable evidence that bipartisan cooperation is possible between the Bush White House and the Democratic-controlled Congress. It could open the door to Congressional endorsement of other FTAs (Colombia and Peru), and perhaps the renewal of the president’s fast-track trade negotiating authority, which expires this summer.
While details of the deal are just being posted, it appears that each side made some tough, timely accommodations (e.g., rice and beef), and that some nettlesome issues (e.g., products manufactured in the Kaesong Special Economic Zone) were kicked down the road or passed over to “working groups.” It obviously took a firm deadline to force reciprocal concessions needed for an agreement. Some Democrats, including Senator Debbie Stabenow of Michigan, immediately signaled strong opposition, and the prospect of possibly tough sledding in the Senate is enhanced by the expression of second thoughts about the benefits of globalization and free trade by prominent Democratic economists ― among them, former Federal Reserve Governor Alan Blinder. Yet, Susan Schwab, the administration’s top trade negotiator, and Congressman Charles Rangel, chairman of the House Ways and Means Committee, have consulted closely throughout the negotiations, and each appears eager to nail down an agreement. Evidently, Korean leaders share that conviction.
They should. For South Korea, the agreement offers broader access to a gigantic U.S. market, a prod to further economic reform at home and leverage for future trade negotiations with the Europeans and others. For the United States, it provides momentum for similar trade pacts with other advanced industrial countries, and, hopefully, for a major push to complete the Doha Round.
In the meanwhile, it should give a boost to bilateral ties between our respective governments and peoples. Considering the value both countries have derived from the U.S.-Korea partnership over the past half century, that is ample cause for celebration.

*The writer, a former U.S. ambassador to Japan, is a professor at Stanford University.

by Michael H. Armacost
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