Landmark Free-Trade Agreement Signed by South Korea, U.S.The United States and South Korea today signed a landmark free-trade agreement (FTA), which is set to increase bilateral trade by US$20 billion.
A Last Minute Deal After 10 months of protracted negotiations, the United States and South Korea have reached a landmark FTA, immediately ahead of today’s U.S.-imposed deadline. The FTA, which is set to boost trade between the two trading partners by as much as US$20 billion, was inked only minutes before the final deadline of 1 pm Seoul time. Negotiators have been racing against the clock in a bid to submit the deal in time to allow President George W. Bush to fast-track the deal through Congress before his trade authority expires. Bush has to notify Congress of any new agreements he wishes to sign 90 days in advance, making 1 April the effective cut-off. President Bush subsequently welcomed the agreement, which is the largest FTA to be concluded by the United States since the signing of the NAFTA in 1993, saying that it would serve to generate export opportunities for farmers, manufacturers and service suppliers. South Korean trade minister Kim Hyun-chong heralded the deal as the most important event to take place between the two nations since they concluded a military alliance in 1953 at the end of the Korean War. However, the deal has faced significant opposition on both sides. During the past 10 months of talks, Seoul has been the scene to numerous demonstrations, sometimes involving thousands of protesting farmers and labourers fearing that the glut of U.S. imports following the conclusion of a trade pact would serve to undermine their livelihoods. Over the past week, several opposition politicians have gone on hunger strike over the issue and a man set himself on fire close to the venue of the negotiations to protest the deal this weekend. In the United States, leading Democrats have condemned the FTA, holding that it will serve to increase the burgeoning U.S. trade deficit, cost jobs and hurt several sectors, notably the automotive industry. Removing the Last Sticking Points Bilateral trade between the United States and South Korea amounted to US$74 billion last year and is set to increase substantially as economic barriers are scrapped under the FTA. Negotiators, however, succeeded in removing a number of key sticking points to the FTA over the weekend, including contentious areas such as U.S. beef, automobiles, rice and the inclusion of South Korean products made in North Korea. As part of the last minute compromises, the Seoul government after much controversy agreed to phase out its current 40% tariff on beef from the United States, with the latter claiming that this was a vital concern in the country’s foreign policy. However, South Korea refused to budge on the most sensitive issue of its heavily subsidised rice sector, with farmers having been particularly fierce opponents of the FTA. Moreover, the two sides agreed to open their markets to each other’s automotive industries. In a surprise move, the United States further agreed in principle to accord preferential treatment to South Korean products from the North Korea Kaesong industrial complex. A Victory for the United States and South Korea Alike The last-gasp breakthrough with South Korea has come as a relief for the politically-embattled U.S. administration. Under President Bush, the administration has pursued bilateral trade agreements with key trading partners and political allies with some vigour. With prospects for the Doha Round of multilateral trade negotiations looking poor, the United States has prioritised bilateral initiatives instead, which will often deliver more preferential terms in any case, but with limited success. Notable recent successes aside from South Korea include an FTA with Panama (which was notified to Congress on 30 March), Trade Promotion Agreements with Peru and Colombia, and a deal to normalise trade relations with Vietnam, but negotiations with many other countries such as Malaysia have become bogged down. The South Korea deal should help to inject some renewed vigour into other FTA negotiations that are under way, particularly as other Asian countries worry that their exporters are at a disadvantage compared with South Korean. Although the trade deal presents economic opportunities for both sides, they are weighted in favour of South Korea. In addition to providing greater access to the country’s second-largest market, the FTA is expected to increase momentum for market-based reform in the country, with increased competition set to reinvigorate South Korea’s industries and service sector. It further serves to consolidate South Korea’s alliance with the United States at a time when its military alliance is in decline, with the two sides having recently agreed that the United States will transfer wartime military control to South Korea by 2012. Relations have generally been uneasy between the two allies over the last year, with the left-leaning President Roh Moo-hyun having pushed its engagement strategies with North Korea despite the country’s bold move to test a long-range missile and a nuclear bomb last year. Bilateral economic relations between the United States and South Korea are as such set to be rehabilitated, with trade and investment into South Korea growing despite the U.S. military commitment being on the wane. It further provides South Korea with a boost in U.S. markets vis-à-vis its rivals from the Asian region, notably China and Japan, with a key concern being that of making the country’s economy competitive enough to face up to the growing export challenge from China. In this context, it gives South Korea increased leverage when it moves to commence free-trade negotiations with major players such as China and the European Union (EU), with talks scheduled to start with the EU next month. Outlook and Implications The landmark FTA still requires legislative approval. It is yet to be ratified by the South Korean National Assembly, where it remains controversial. However, its passage should be ensured as the opposition has shown its willingness to back the pact with newspaper polls showing that 55% of legislators are in favour of the pact, according to Agence France-Presse (AFP). The U.S. Congress is also expected to ratify the agreement, which has narrowly made it in time before the president’s authority to fast-track trade deals through congress requiring a yes or no vote as opposed to amendments is set to expire. Although the agreement has met the fast-track Trade Promotion Authority (TPA), this does not mean that the FTA is a done deal, however, as the Democrats who now control Congress are still in a position to reject it outright. So how likely is this, and are the Democrats really as protectionist as they sound? There is no doubt that the Democrats' general tone on trade has shifted since the days of the Clinton presidency, when there was significant free-trade enthusiasm. Since then, free trade has become increasingly controversial because of its perceived link to the loss of U.S. manufacturing jobs to cheaper overseas competitors. Democrats who wish to appeal to the working class electorate unsurprisingly target this issue, although rather than using a naked economic protectionist rationale, they tend to base their opposition on social, labour and environmental standards instead. There is some optimism, however, that the opposition to the new deals is not as stiff as it might seem. A number of prominent Democrats have always been pro-free trade and they have been making their voices heard more effectively. Others known as more protectionist have lately indicated that given sufficient labour safeguards they are not averse to new deals. There is a chance that the TPA itself could be extended, albeit with some tough caveats. Looking at prospects for the deal itself in Congress, the signals have been mixed. Its chances look reasonable, but issues such as the preferential treatment of South Korean goods made in North Korea could spark a backlash. Democrat Speaker of the House of Representatives Nancy Pelosi signalled her disquiet about U.S. concessions last week, calling for a "significant course correction" from a "one-way street" in South Korea's favour. There is particular concern in the Democrat camp that the deal will result in a much higher disparity in the countries' automotive trade. Last year only 4,000 U.S. cars were sold in South Korea, while the latter exported some 800,000 to the United States. Automotive trade accounted for around 80% of the countries' US$13-billion trade deficit last year. The sector is one of the most politically sensitive in the United States given its iconic status and its rapidly declining fortunes. Overall, it is difficult to predict what sort of a fight the Democrats will put up, but there is a fair chance that in the end they will prefer to concentrate their energies on moves to force a withdrawal from Iraq and a number of other ongoing tussles with the administration. Puede consultar también Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement Policy Brief 03-6: The Strategic Importance of US-Korea Economic Relations |
| |||||||||||||||||
Acuerdo de Libre Comercio USA-Corea del Sur
Publicar un comentario