This was written for the Korea Matters for America project.
Both houses of the Congress approved the US-South Korea Free Trade Agreement yesterday, marking the largest expansion of trade relations since the North American Free Trade Agreement (NAFTA) took effect seventeen years ago. The Korea agreement was passed along with trade deals with Columbia and Panama.
The deal passed as South Korean President Lee Myung-Bak began an official state visit in the United States with President Barack Obama. President Obama said the trade deals are “a major win for American workers and businesses,” and that “the alliance between the United States and the Republic of Korea is stronger than it has ever been.” President Lee called the agreement a “historic achievement” that “will open up a new chapter in our relationship.”
The deals drew bipartisan support in Congress. Senator Mitch McConnell (R-Ky.), applauded the fact that it drew votes from both Republicans and Democrats. “At long last, we are going to do something important for the country on a bipartisan basis,” he said, adding that “it isn’t just manufacturing that will benefit — America’s service and technological sectors, where we’re global leaders,” will also see benefits. Senate Max Baucus (D-Mont.), Chairman of the Finance Committee, emphasized that the trade deal is an important achievement in terms of economics and foreign policy, solidifying the US strategic relationship with South Korea:
By approving these agreements, we also bind ourselves even more closely to three of our most important allies, and we demonstrate to countries around the world that the United States is a good and dependable partner.
The deal is significant because the administration estimates it will lead to an increase of US exports to Korea by $11 billion in the first year in which it is in full effect. However, estimates of the impact on US employment vary widely and are hotly contested. The Obama administration says the deal will “support at least 70,000 American jobs,” while the US Chamber of Commerce estimates the three agreements together will prevent the loss of 380,000 jobs. The AFL-CIO, the nation’s largest labor federation, opposes the accords which it says they will eliminate 159,000 jobs. A 2007 report (PDF) by the government’s US International Trade Commission (USITC) found that the number of jobs added “would likely be negligible.”
The US sectors expected to benefit the most from the deal include producers of beef, dairy, pork and poultry products, chemicals, and plastics. Service industries such as banking and financial services are also expected to benefit as a result of streamlined regulations on foreign investment, according to the Washington Post.
The deal has yet to be ratified by Korea’s unicameral legislative parliament due to “political wrangling” and concerns by Korea’s small retailers and service firms that US firms may take market share when they enter the Korean market. The deal passed the US House on a 278-151 vote and passed the Senate on an 83-15 vote.