How is it even remotely possible that President Obama failed to conclude a trade agreement with South Korea? Our beleaguered leader desperately needs a win, and the United States desperately needs to expand trade. What can possibly have held up the passage of a pact that is important to the country and that, after all, has been pending for four years?
President Obama, in one of his more enlightened moments, has made the doubling of exports a keystone of his program to create much-needed jobs. That essential goal recognizes that the indebted U.S. consumer cannot be the only cog in our growth machine. Like nearly every other country on earth, we need to tap the energies and appetites of the developing world – and especially successful countries like South Korea, which has quickly become one of the twentieth largest nations on the globe. South Korea has been a strong ally to the U.S. and is an essential component of our security strategy in Asia – excellent reasons to favor expanded relations on all fronts.
The trade agreement with South Korea signed in 2007 promised ramped-up commerce between the two nations, and was one of the largest pacts in several decades. Sadly, politics intervened in the form of opposition from the UAW and the agreement has since been held captive by union-dependent Democrats in Congress. In advocating for its passage, and for expanded trade, President Obama seemed willing to buck big labor’s influence; his failure to get the job done is beyond disappointing.
The sticking point for negotiations is auto imports. The U.S. imports some 42% of the autos sold here, while South Korea has import penetration of only 4.4%, the lowest in the world except for Japan. Nearly 5% of all cars sold in the U.S. come from Korea—while we export only a small number to that country. Ford, in particular, is opposed to the deal – in part because GM got the jump on them some time ago by buying Daewoo, which produces and sells in Korea. In an interview on NPR the Peterson Institute’s Marcus Noland said, “this is really more of a Ford issue than an American automobile sector issue.”
While we have dithered, numerous other countries have signed trade pacts with South Korea. Just last month, the EU concluded a sweeping agreement with the nation, which is projected to double trade between the two bodies. So extensive is the pact expected to be that Japan, concerned with being left out of the loop, has just announced its intention to pursue a similar agreement with the EU.
The United States is falling behind on a number of fronts; trade is one of the most costly. Today our exports to South Korea are concentrated in semiconductors, industrial machines, civilian aircraft and chemicals. These are industries that provide good jobs and that we need to support. To hold all other producers hostage to the UAW is damaging and short-sighted.
Most important, Americans need to see our president willing to stand up and buck the labor unions who have pushed a great deal of our manufacturing offshore. President Obama said about the trade impasse, “If we rush something that can’t garner popular support, that’s going to be a problem.” This agreement has been under consideration for four years – it has not exactly been “rushed.” More important, is President Obama now committed to passing only popular measures as he begins his run for reelection?
It is time for President Obama to exhibit some leadership. We have tough decisions ahead. Signing an agreement with South Korea that would boost our exports is not one of them.
