Congress likely to support Korea-US FTA

Posted on : 2007-08-27 09:35 KST Modified on : 2019-10-19 20:29 KST

The U.S. Congress is likely to support the free trade agreement (FTA), not because of expectations of economic benefits but rather because of its political importance, an American analyst said.

Jeffrey Schott, senior fellow at the Peterson Institute for International Studies, said other FTAs debated by the Congress, including the North American FTA (NAFTA), have been sold on foreign policy grounds.

"Increased trade and investment generated by a bilateral pact, even with a major trading partner, is not that important for the US$13 trillion U.S. economy," he said in his August policy brief for the institute.

The NAFTA was headed for defeat in the Congress until then Gen.

Colin Powell convincingly argued that the deal would promote stability throughout Central America and thus greater border security with Mexico, Schott said.

"I expect a similar dynamic to drive the ratification debate on the KORUS (Korea-U.S.) FTA," he said.

"Ultimately, however, the Congress will likely support the KORUS FTA because of its strategic importance -- in particular the durability of the U.S.-Korea alliance over the past half century and our mutual interest in reinforcing it, our common objectives in promoting peace and prosperity on the Korean Peninsula, and the breadth of the U.S. commitment in the East Asian region."

The trade agreement, signed in June, removes tariff and non-tariff barriers for goods and services flowing between the two countries and is expected to boost bilateral trade by up to $29 billion. For the U.S. side, it is the largest such pact since NAFTA and the first with an Asian nation.

South Korean farmers strongly oppose the deal they say will bring in a flood of cheap agricultural products and threaten their livelihoods. In the U.S., some legislators, including House Speaker Nancy Pelosi and other senior Democrats, criticize it for not guaranteeing South Korea's fair and full auto market opening.

Schott argued, however, that solving the U.S. auto industry's financial problems should be through domestic reforms, not from increased access to the Korean market.

Democratic critique of the auto provisions is not convincing, he said, but the George W. Bush administration does need to take action for competitiveness of the American auto industry.

"For example, federal programs could assist the companies in complying with new fuel economy standards and financing their 'legacy' pension and healthcare costs," Schott wrote.
WASHINGTON, Aug. 26 (Yonhap News)