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Wednesday, November 17, 2010

Obama's Korea failure

FOR THOSE WHO believe, as we do, that free trade can help fight global recession and prepare the U.S. economy for a new, more competitive future, President Obama's trip to Asia was a disappointment. In particular, Mr. Obama's negotiators were unable to agree with their South Korean counterparts on revisions to a much-delayed U.S.-Korea free trade pact, as Mr. Obama had promised in June. Though both countries insisted the talks would continue, it's anyone's guess when Congress and the Korean National Assembly will finally get to vote on free trade between Korea and the United States.

This setback has many authors, including Korean protectionists who stoked a public overreaction to a long-ago mad-cow disease outbreak in the U.S. cattle herd. But Mr. Obama and his fellow Democrats in Congress have the most to answer for.

The Bush administration completed the U.S.-Korea free trade deal in mid-2007. The heart of the agreement is a three-year phaseout of tariffs on 95 percent of all consumer and industrial products on both sides. The vast majority of U.S. business sectors favor the deal, and it would help both economies to grow. However, congressional Democrats blocked it, arguing it would cost American jobs, and as a candidate for president in 2008 Mr. Obama rejected the deal as "badly flawed." In office, he dithered for months, before finally declaring himself in favor of moving forward with a revised treaty.

In opposing the deal during the campaign, Mr. Obama echoed claims by the Ford Motor Company and the United Auto Workers. Under the agreement, Korea and the U.S. would end their respective tariffs on autos and light trucks; Korea additionally pledged to reduce tax and regulatory obstacles to imports, and accepted a mechanism that could permit the US to reimpose tariffs if Korea tried to reestablish non-tariff barriers. Ford and the UAW say that isn't enough, insisting on guarantees that Korea won't use environmental and safety standards as a de facto bar to US vehicles. In the most recent talks, Mr. Obama has been trying to get the Koreans to meet him halfway on this point. (Continues here)

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