Friday, September 21, 2007
Free and fair trade is important to Washington state and is in the best interest of the United States. Economic opportunity improves everybody's standard of living, which is vital to world peace.
However, international trade agreements can sometimes become political footballs, held hostage in Congress for partisan advantage. Hopefully, that won't happen with the free trade agreement signed June 30 by the United States and South Korea. This pact between two important allies who share many of the same values will benefit the United States in general and our state in particular. Washington's congressional delegation should support it.
With a $1 trillion economy, South Korea is America's 7th largest trading partner, with more than $80 billion of business in 2006. While the bulk of that was imports into the United States, South Koreans bought $32.5 billion worth of American products last year, much of it from Washington state. In fact, Washington is our nation's third-largest exporter to South Korea, netting nearly $2.5 billion in 2006, and this trade agreement offers even greater opportunities for our country.
For example, Korean Air and Asiana airlines are big Boeing customers. When visiting Korea with Gov. Gregoire on her trade mission, we found that Koreans love Washington wine, drink Starbucks coffee, depend on Microsoft software, shop at Costco, and value and respect their relations with America.
South Korea has nearly 49 million people who live in an area about the size of western Washington. Seoul alone has 22 million citizens, and our state's agriculture products are a principal food source.
The United States-South Korea agreement must still be ratified by Congress, but approval is by no means certain.
According to trade officials, we have made significant progress in reducing South Korea's trade barriers to U.S. products thanks to the pact. For example, 95 percent of all goods traded between the two countries will become duty-free within three years. Most of the remaining items will be tariff-free within 10 years.
Most importantly for Washington producers, a number of products will become duty-free immediately, including wheat, soybeans, feed corn, orange and grape juice, cherries and wine.
Another major hurdle was removed last September when South Korea lifted its ban on U.S. beef, in place since 2003 because of an outbreak of "mad cow" disease. The decision reopens an export market worth $450 million a year to American ranchers.
The biggest remaining sticking point is automobiles.
Most of our $14 billion trade deficit with South Korea is related to cars, and opponents say that nation's protectionist policies are to blame. Korean automakers sold more than 800,000 vehicles to Americans last year, while U.S. automakers sold only 7,165 vehicles to South Koreans. Even factoring in the difference in population, the imbalance is huge.
Opponents, including U.S. automakers and the powerful United Auto Workers union, say the South Korean government makes it harder for foreign automakers to do business there. According to the Automotive Trade Policy Council, new rules and tax changes constantly target foreign automakers with everything from random changes in license plate sizes to putting foreign vehicles in the highest-risk categories for auto insurance.
U.S. trade representatives say they made good progress in relieving these barriers. Both countries agreed to phase out vehicle tariffs immediately, and U.S. negotiators say the agreement includes "a broad range of focused provisions" intended to open up Korea's auto market to U.S. manufacturers. While that may not seem like a big step, it is nevertheless a forward movement.
If labor leaders remain unconvinced, they could exert considerable pressure on congressional Democrats to reject the pact in upcoming elections. That would be bad for our country and bad for our state. It damages Washington's relations with an important friend and ally.
While the United States-South Korean trade pact is not perfect, no agreement is. But it is a big step forward and should be approved.
Don C. Brunell is president of the Association of Washington Business.