[Outlook]Big push needed for the FTAAlthough the prospects that the United States Congress would approve the Korea-U.S. Free Trade Agreement in 2008 are dimming, Korea must do all it can to help make sure it passes this year.
As presidents Lee Myung-bak and George W. Bush confirmed at their August meeting in Korea, ratification of the pact this year remains a high priority for both leaders. But the question remains as to how this political will can best be harnessed in order to secure congressional passage of the trade deal in the limited time remaining this year.
Significant hurdles to U.S. Congressional approval of the Korea?U.S. FTA remain. The core challenge is that few legislative days remain for the current (110th) Congress, whose two-year term expires at the end of 2008. Congress adjourns at the end of September, which does not leave enough time for it to consider the FTA with Korea.
Congress could reconvene briefly after the November 4 election in a so-called lame-duck session, in which the FTA could be considered, but prospects for such a session are far from certain at this time. Even if a lame-duck session is held, Congress will be under great domestic pressure to deliver on other priorities for the United States, such as an economic stimulus package and energy relief programs.
A second major obstacle to congressional approval of the Korea?U.S. FTA is that there are two other free trade agreements also pending before the Congress. Prior to the conclusion of the FTA negotiations with Korea in 2007, the U.S. completed deals with Colombia and Panama. These three FTAs will likely be considered by Congress in the order in which they were negotiated - putting the FTA with Korea third in line. Furthermore, the Bush administration has yet to send draft implementing legislation for the Korea?U.S. FTA to Congress - a key step on the path toward ratification of the agreement.
Third, some Democratic lawmakers are drawing attention to supposed flaws in the agreement that, they say, warrant a complete renegotiation.
For example, Representative Sander Levin, an influential Democrat, has repeatedly demanded that the FTA with Korea be renegotiated to “adequately” address the tariff and nontariff barriers U.S. automakers face in the Korean market.
Others maintain that the revised beef protocol does not provide adequate Korean market access for U.S. beef.
Notwithstanding these significant stumbling blocks, the current economic circumstances in the U.S. present a window of opportunity for Korea to advocate passage of the Korea?U.S. FTA this year.
Intensifying concerns about the health of the U.S. economy have forced the administration and Congress to focus on options for economic growth, ironically giving U.S. supporters of the FTA with Korea an opening to continue to publicize the positive economic impact of the free trade deal on the U.S. economy.
For one, exports, which would increase under the pact, have emerged as one of the few bright spots in the U.S. economy. According to the U.S. National Association of Manufacturers - a leading U.S. industry group - exports of U.S.-manufactured goods in June this year were 17.4 percent higher than they were in June 2007.
The reduction and, in many cases, elimination of Korean import tariffs under the Korea?U.S. FTA would allow a diverse range of U.S. manufacturers in many states to accelerate this export-led growth, and thereby to offset weaker areas of U.S. economic performance.
Indeed, as recently estimated by the U.S. International Trade Commission, the FTA with Korea would result in new trade flows expected to contribute up to $12 billion annually to the U.S. gross domestic product.
And, of course, Korea also stands to benefit considerably from the bilateral trade pact. The ITC has estimated that the deal would result in $20 billion per year growth in two-way trade.
The geo-strategic and political benefits of the FTA, which would do much to buttress Korea’s global standing, are beyond measure.
Second, much of the U.S. Congress is already convinced - rightly - that the U.S. economy would benefit from approval of the Korea?U.S. FTA. Recognizing this strong existing support in Congress and the prospects for U.S. economic growth under the free trade deal, U.S. business groups have renewed their push to persuade Congress to act on the agreement this year.
It appears that, as of now, there may be enough Republican and Democratic votes in the Congress to secure approval. Korea should thus continue to do its part to persuade the Congress to convene a lame-duck session and consider the Korea?U.S. FTA before the end of the year.
To be sure, little time remains for the U.S. Congress to approve the agreement this year, but the benefits of doing so are too great for both countries to ignore. Korea has, to date, done an excellent job in negotiating and promoting the FTA with the U.S. The country must continue to do its part to try to get it passed in 2008, while the political calculus is still known.
The political context for passage of the agreement next year will likely be worse. By most accounts, the Democratic Party, which takes a dim view of free trade agreements, will have an expanded majority in the U.S. Congress.
Also, there is a good chance that Barack Obama, a Democrat who came out against the FTA with Korea during the primary, will win the White House.
In short, 2008 might afford the best, if slim, chance to pass the Korea?U.S. FTA, and Korea must do its part to maximize the chances of success. Korea should not give up - and lose the tremendous benefits the FTA would bring - just because its chances are low.
Also, and importantly, if the obstacles to passage of the FTA in 2008 cannot be overcome, efforts to secure its passage this year will not be wasted. Indeed, Korea’s efforts in 2008 will lay important groundwork that will facilitate passage of the FTA by a new U.S. Congress and administration.
*The writer is a senior partner at the law firm of Akin Gump Strauss Hauer & Feld LLP in Washington, D.C.
by Kim Sukhan