Wednesday November 5, 2008
Obama Win Likely to Harm S. Korea's Bid for Early Fta Approval
SEOUL, Nov 5 Asia Pulse -- South Korea's push to ratify a free trade agreement (FTA) with the United States by year's end is widely expected to face further hurdles following Barack Obama's election as U.S. president.
Experts say chances for the trade bill's approval by the U.S. Congress may be even slimmer, as outgoing U.S. President George W. Bush has been unsuccessful in his efforts over the past year to convince the Democratic-controlled Congress to pass the agreement. During the course of his campaign, Obama has repeatedly expressed his opposition to the pending trade deal with Korea, citing an imbalance in auto trade between the two nations.
"It will happen and must happen, both countries know," said political analyst Bae Myung-jin. "But it will likely take more time than the Korean government may have hoped for."
Seoul's eight-month-old Lee Myung-bak government has been seeking parliamentary approval of the much-delayed trade pact, particularly since a controversial decision to resume U.S. beef imports earlier this year for which it was widely criticized. The government submitted the motion to the National Assembly last month in the second of such attempts.
The agreement, originally struck under the former Roh Moo-hyun administration after year-long negotiations, has been pending with the legislatures of both countries for over a year.
"Regardless of the circumstances in the U.S., the government and the ruling party have agreed to have the deal approved by the National Assembly before the end of this year," President Lee told a meeting of the Korea-U.S. Business Council last week.
The approval of the Korea-U.S. FTA will likely give a boost to the economic initiatives of Seoul's conservative government, which are currently being pounded by growing uncertainties in the financial market.
For its part, while Lee's Grand National Party (GNP) appears on the surface to be more resolute than ever for speedy passage of the deal, fissures are growing in the party as an increasing number of lawmakers are pointing out that a change of plan might be necessary.
"Obama has stated his opposition to the FTA on many occasions. There is a need for us to take this into consideration," Chung Mong-joon, a ranking GNP lawmaker, told a party meeting Monday. "We may need to reexamine the timing (to press for ratification of the FTA)."
Ruling party whip Hong Joon-pyo, on the other hand, chose to stand by the government.
"It is highly unlikely for Washington to break off the deal following a change of administration, especially a deal made with Korea, its ally," he said.
Hong went on to emphasize technical issues surrounding the bill's passage.
"While the deal will take immediate effect in the U.S. after its ratification, Korea must still pass 24 additional bills before the deal can take full effect," he said. "It makes sense for us to approve the FTA now and settle the remaining bills after the U.S. election."
The main opposition Democratic Party remains skeptical of the deal and describes the ruling party's efforts for its quick passage as "unrealistic and naive." It is also mindful of public sentiment here, which links the bilateral trade pact with the unpopular beef imports deal struck in April.
"What use is it for us to ratify the deal when the U.S. Congress remains so critical?" said the party's floor leader, Won Hye-young. "It is so anachronistic for the ruling party to believe that if we approve it first the U.S. will also approve the deal out of respect for its ally."
The ruling party controls an absolute majority of 172 seats in the 299-member unicameral house, while the main opposition and minority parties hold the rest.
The Seoul-Washington free trade pact has been billed as the most significant event in bilateral relations since the military accord of 1953 following the end of the Korean War. Economically, the deal is expected to boost two-way trade, already worth an annual US$79 billion, by as much as $20 billion in the coming years.
Business groups here are also pushing for early ratification of the agreement, complaining that the delay is causing heavy losses to South Korean exporters of manufactured goods to the world's biggest market.
Farmers, however, are demanding sufficient compensation and countermeasures, fearing they will not be able to compete with cheaper imported products once the deal is finalized.
Disputes are also rampant among U.S. lawmakers, with many Democrats opposed to the deal citing an imbalance in auto trade at a ratio of 700,000 to 5,000 sales per year against the U.S. They also want to see steel shipped to South Korea.
While emphasizing that he is not opposed to the principle of free trade, Obama has described the Korea-U.S. FTA as "badly flawed" in terms of fairness.
"It is easy to expect a further delay in the ratification of the FTA by the U.S. legislature after Obama's win," Seoul's Trade Minister Kim Jong-hoon told a parliamentary session last month. "But I see this as a matter of when, not whether."
"Washington will likely want to revise the FTA, especially in the automobiles sector," said Park Jong-kyu, a research fellow with the Korea Institute of Finance. "But in the long run, the election will not make a significant impact as the Obama administration will eventually decide to settle the deal."
