At the recently concluded G-20 summit, President Barack Obama pledged to resolve remaining issues in a U.S.-South Korea Free Trade Agreement and send it on to Congress for approval. Analysts say that after being stalled for three years, the pledge is a significant step forward that would boost U.S. trade ties with South Korea, as well as with the rest of Asia.
Three years ago this week, the U.S.-South Korea Free Trade Agreement was signed by then-U.S. President George W. Bush and his South Korean counterpart, Roh Moo-hyun, in Seoul. Since then, the bill, along with two other trade deals signed by former President Bush - one with Panama and another with Colombia - has faced opposition from Democratic Party lawmakers in the U.S. Congress.
Troy Stangarone, director of congressional affairs at the Korea Economic Institute in Washington, says President Obama's pledge to push the U.S.-South Korea Free Trade Agreement is a significant step that should move Congress to vote on the measure.
"By taking and setting a deadline, what he [President Obama] has done is, he has provided impetus to try to finally move the agreement forward," said Stangarone.
During a meeting with South Korean leader Lee Myung-bak last Sunday on the sidelines of the G-20 summit, President Obama pledged to work out remaining sticking points with the agreement before G-20 leaders hold their next meeting in November in Seoul. Mr. Obama said he would then submit the agreement to Congress.
"If we look at the timeframe going forward, what we are likely to see is the two sides work on resolving the outstanding issues between now and November," said Stangarone. "At that point, the mid-term elections will have passed. And while I do not expect that we will see the agreement go up during the lame duck session, I do think what we are likely to see is a submission in early 2011."
Much of the opposition to the agreement from U.S. lawmakers comes from the fear that it could open the American market to more South Korean cars and endanger the jobs of U.S. autoworkers. Stangarone says that although there are on average up to 1.4 million vehicles sold in South Korea each year, U.S. access to the South Korean market has been a problem. Last year, U.S. automakers sold about 8,000 vehicles there.
Critics say that although the agreement removes tariffs for automobiles and trucks, it does not adequately address "non-tariff barriers" that South Korea has long used to keep U.S. cars out of its market.
The sale of U.S. beef in South Korea is another key sticking point.
Stangarone says, though, that if the Obama administration can overcome these obstacles, it is unlikely there will be much resistance on Capitol Hill.
Bruce Klinger, an expert on northeast Asia at The Heritage Foundation here in Washington, says the longer the United States waits to approve the deal, the further it will fall behind.
"All studies by not only government, but also non-government organizations, indicated it would have a dramatic improvement for both countries," said Klinger. "Bilateral trade would increase over $10 to 20 billion per year, increase the U.S. GDP by $10 billion a year. So all the studies show it would be a direct economic benefit to the United States."
Klinger says that during the three years that the treaty has been held up in Congress, South Korea has negotiated and signed, and is about to implement a free trade agreement with the European Union, which is now South Korea's leading trading partner. South Korea also is looking at free trade agreements with Australia, New Zealand, India and China.
During the past decade, the United States has slipped from being Seoul's number one trading partner to its fourth, behind the EU, China and Japan.
The director of the Asia Foundation's Center for U.S.-Korea Policy, Scott Snyder, says that while it has been argued that the U.S.-South Korea agreement would boost exports and jobs, it might not be easy to convince the public and members of Congress of the benefits of a free trade agreement.
"In the context of recent economic difficulties, it is actually a harder sell," said Snyder. "I think that that is because during times of economic difficulty, there is a tendency for the public to look with skepticism at FTAs."
But Snyder adds that, unlike other free trade agreements with less developed countries, there is little concern about offshoring of jobs. In addition to selling automobiles to the United States, South Korean automakers invest in the U.S.
American and South Korean trade officials are expected to meet this month and set a schedule to work through remaining obstacles before November.