No US-Korea Free Trade Agreement For Now

Dave Johnson

It appears that the US and Korea could not reach agreement in time for President Obama’s visit to Seoul for the G20 meeting beginning today.

Washington Post, U.S., South Korea fail to reach free-trade deal,,

Negotiations over a U.S.-Korea free-trade agreement faltered Thursday after four days of discussions, a setback for the leaders of the two nations and a blow to efforts to rekindle broader world trade talks.

The holdup was agreement over mostly autos. Reported by Reuters,

Mike Froman, an economic adviser to President Barack Obama, said there were a number of other sticking points, but autos had been the main obstacle to a deal.

“Autos is a major outstanding issue and we’ve spent a great deal of time on autos in the last four days and will be continuing to work on that issue as we go forward,” Froman told reporters after a meeting in Seoul between Obama and South Korean President Lee Myung-bak that had been dominated by trade.

Missing this deadline only means that President Obama and South Korean President Lee Myung-bak will not announce agreement together in Seoul. The talks will continue in coming weeks.

While this holdup is over automobile and beef issues, Public Citizen points out that there are other problems with the agreement, that would lead to NAFTA-style job losses for Americans, if the treaty is ratified. The treaty was originally negotiated by the Bush administration, and contains the same kind of language that previous trade agreements contained, encouraging American companies to outsource jobs. In a press release titled, Continuing Negotiations on Korea Trade Deal Are a Good Sign, Public Citizen says,

That the administration would not move forward with the same NAFTA-style Korea trade agreement that former President George W. Bush signed in 2007 is understandable, especially given that the recent election showed that perhaps the one issue that unites Americans across diverse demographics is opposition to more-of-the-same trade policy. More reasons include a recent study showing that export growth under past U.S. FTAs was less than half of that to non-FTA U.S. trade partners, and Bush-era reviews of this pact show it will increase the U.S. trade deficit.

Hopefully, the reason the administration is not yet ready to present a final trade agreement is that it has gotten the message that more than “cars and cows” need fixing in Bush’s 2007 trade pact text. By not locking into the current text today, the Obama administration has the opportunity to make the fundamental reforms that President Barack Obama promised during his election campaign, including to remove the investment rules that promote offshoring.

More information on these issues is available at Public Citizen’s Korea Free Trade Agreement page, including a chart that compares President Obama’s campaign statements on trade with the text of the current US-Korea Free Trade Agreement.

Public Citizen also has a petition, “telling Obama that Adopting Bush’s NAFTA-Style Korea Trade Agreement = Political Suicide”

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