The Wall Street Journal Asia
July 17, 2009
The European Union and South Korea announced this week that they’re close to finalizing a free trade pact, having reached agreements in principle on the remaining sticking points. As for the pending U.S.-Korea free trade agreement, Congress in recent months has done . . . nothing.
Brussels and Seoul have finished the outline of an agreement, and the two sides will now write up the technical language to codify it. Meanwhile, the European Commission is informing member states of the details of the proposal, and European governments will make a final decision on whether to approve it. The accord still faces procedural and political hurdles, but Swedish Prime Minister Fredrik Reinfeldt said Monday he hopes it can be finalized during his country’s rotating EU presidency, meaning by the end of December.
Notable in all this is the determination of leaders on both sides to secure a deal. Korea has made negotiating free trade agreements a centerpiece of its foreign and economic policy in recent years. The U.S. FTA, signed but not yet ratified, is just one example. Negotiations are planned or under way with a long list of countries, including India, Canada and Australia. On the EU side, the Commission has been vigorously defending the pact against domestic critics, including the European auto industry. EU approval of a trade deal still isn’t a sure thing, but odds are good.
Compare and contrast with the U.S., where an FTA with Korea has gotten bogged down in Big Labor politics. Bashing the deal, signed by the Bush Administration in 2007, became de rigueur in the Democratic Party primary before last year’s Presidential election. Candidates Barack Obama and Hillary Clinton both claimed the deal wouldn’t do enough to open Korea’s auto market to U.S. imports, all evidence to the contrary. Now, with Democrats running both the White House and Congress, prospects are bleak for any trade deal. Colombia has been left hanging alongside South Korea.
According to the Commission, the EU-Korea deal will eliminate €1.6 billion ($2.2 billion) in duties Korea currently imposes each year on European goods — and it would cut duties and eliminate non-tariff barriers on imports of European cars. American companies could gain similar benefits if only Congress would approve the U.S.-Korea deal.
Korea’s progress in talks with the EU shows how risky these delays on the U.S. side are. Brussels is likely to approve a deal granting European businesses more access to the world’s 13th largest economy, even if American leaders won’t do the same for U.S. companies. In a perfect world, all countries would be able to benefit from multilateral trade opening under the Doha Round. But for now, bilateral deals are the best thing going and America can’t afford to leave itself behind.