U.S. Free-Trade Pact with South Korea Would Enhance Partnership

Washington – If approved by Congress, the free-trade agreement between the United States and South Korea (KORUS FTA) would help broaden and modernize the partnership between the two countries and anchor the U.S. presence in the most economically vibrant region in the world, U.S. officials say.

The agreement completed in April would supplement the long-standing bilateral security alliance between the two countries and serve as its pillar in the 21st century, according to Christopher Hill, assistant secretary of state for East Asian and Pacific affairs. (See related article.)

Testifying before the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade June 13, Hill said South Korea has become not only a regional power but also a globally significant nation with which the United States shares concerns about problems such as the stability of the Middle East and climate change.

In addition, he said, the agreement would strengthen the U.S. strategic economic position in East Asia at a time when the region is moving toward greater economic integration.

Deputy U.S. Trade Representative Karan Bhatia said at the same hearing that U.S. global competitors already have established or are trying to establish trading relationships in the region that exclude the United States. He cited as examples the growing number of bilateral deals, China’s FTA with the Association of Southeast Asian Nations and regional efforts to form an exclusive Asian free-trade block. Bhatia also said the European Union launched free-trade negotiations with South Korea in May.

The trade official called the KORUS FTA the “most commercially significant” since the 1992 North America Free Trade Agreement.

Bhatia said the FTA with South Korea could serve as a model that the administration believes can be replicated with other Asian economies, helping it expand trade liberalization throughout the region.

In contrast, failure by Congress to approve this agreement “would likely result in a shift of the region’s attention away from strengthening … relationships with the United States to doing deals with other major trading partners,” he warned.

The U.S.-South Korea pact is among four completed FTAs that have yet to win congressional approval.  Some lawmakers have voiced concerns that it does not go far enough in opening the Korean market to U.S. autos and have complained that Korea continues to ban U.S. beef.

In 2006, U.S. companies sold about 4,000 cars in South Korea, while Korean firms sold 800,000 cars in the United States, according to the Office of the U.S. Trade Representative.

Earlier in June, U.S. Trade Representative Susan Schwab defended the deal as a “very strong” one for U.S. automakers as it immediately would remove the 8 percent tariff on American cars and establish an unprecedented dispute settlement process.

But Schwab said South Korea must reopen its market to all U.S. beef.

"The KORUS FTA is not getting through Congress unless Korea fully reopens its market to U.S. beef - that includes boneless, bone-in, offals, and variety meats," she said.  (See related article.)

The full text of Hill's prepared testimony is available on the State Department Web site.

For more information on U.S. policies, see The U.S. and the Korean Peninsula.