ANOTHER GREAT BLIP BY Brendon Carr, At first I was all for the FTA, Then when I got a better look at it I went ANTI-FTA, fast. AS a loyal voter of the GOP and one who supports FTA, this one was a bad deal for the USA and a great deal for Korea, and the idiots were still opposing it here in Korea. I recall an old saying, "Be careful what you wish for. You might just get it."
US-KOREAS FTA DOA
Thanks to an eagle-eyed Korea Law Blog reader who sent me this article (Thanks, reader!), we report that the Wall Street Journal says the Democrats won’t allow the United States’ Free Trade Agreement with Korea (KORUS FTA) to receive its necessary Congressional ratification. As I have predicted here and at the Marmot’s Hole, this deal—rightly or wrongly—suffers from a number of perceptions that conspire to make it unpalatable. Chief among them are that it doesn’t do enough to open Korean markets, when compared to the benefits Korea gets from US.
The Wall Street Journal says something is better than nothing:
In any case, the U.S.-Korea FTA is a big new opportunity for American goods and services. As soon as the deal goes into force, 95% of tariffs on consumer and industrial goods will be eliminated. Within a decade, almost all remaining tariffs will hit zero. In financial services, U.S. firms will have carte blanche to start up or acquire South Korean companies, part of Seoul’s aspiration to become a regional financial hub.
Agriculture has long been a bulwark of Korean protectionism, but under the deal more than half of all U.S. farm exports will receive duty-free treatment. The pact also guarantees that U.S. investors will be treated on a level playing field in Korean courts. And it sets up an international arbitration panel for U.S. firms that believe they’ve been wronged by the Korean government.
Even in autos, the pact is a big improvement over South Korea’s current protectionism. Last year Korea imported 4,344 U.S.-made passenger vehicles, while the U.S. imported more than 695,000 from Korea. Seoul has also failed to follow through on its 1995 and 1998 auto agreements with the U.S., but the biggest losers on that score have been Korean consumers. The free-trade pact would eliminate South Korea’s 8% tariff on passenger cars (versus 2.5% in the U.S.), and it would introduce a new mechanism to provide a head’s-up about Korea’s bad habit of imposing non-tariff import barriers.
The problem with U.S. autos in Korea is more than trade barriers, by the way. European car makers are subject to similar barriers, but their sales are doing just fine. It’s also worth noting that, while Ford and Chrysler oppose the FTA, General Motors does not, perhaps because it is doing well in its joint venture with Daewoo.