Pass the U.S.-Korea trade pact

With the multilateral Doha Round trade negotiations seemingly dead in the water, the United States and South Korea signed last week the largest bilateral free trade agreement in history. It was the first bilateral free trade agreement between America and a major Asian trading partner, and its consummation immediately led to increased interest in Japan in signing its own agreement with the United States.

The U.S.-South Korean agreement, which must be approved by the legislatures of both countries, would abolish many of the tariffs and other trade barriers between the world’s largest and 10th-largest economies. South Korea has nearly 50 million consumers. Although it does not apply to rice, the agreement nonetheless would be a boon for U.S. farmers and service providers, especially Hollywood and the banking and insurance industries. South Korea is America’s seventh-largest goods trading partner. Last year, U.S. exports to South Korea totaled $32.4 billion. U.S. imports were $45.8 billion.

The pact represents the largest agreement of its kind since then-outgoing President George H.W. Bush signed the North American Free Trade Agreement (NAFTA) with Canada and Mexico in December 1992. The following year then-President Clinton forged bipartisan coalitions to pass NAFTA in both the House (132 Republican and 102 Democrats voted yes) and the Senate (34 Republicans and 27 Democrats). The next year, the House (121 Republicans and 167 Democrats) and the Senate (35 Republicans and 41 Democrats) overwhelmingly approved the last multilateral trade agreement (the Uruguay Round), which established the World Trade Organization (WTO). However, as C. Fred Bergsten of the Peterson Institute for International Economics recently noted, “[a]ll congressional votes on major trade issues for the past 12 years have been excruciatingly close.”

The trade pact was literally signed within minutes of the expiration of a U.S. legal deadline, which required President Bush to notify Congress of the agreement at least 90 days before his fast-track trade-negotiating authority ends on June 30. Under fast-track rules, Congress may not amend the pact. Only up-or-down votes are permitted. Passage is by no means guaranteed, either in Congress or the South Korean legislature. Indeed, Senate Finance Committee Chairman Max Baucus of Montana called the agreement “an entirely unacceptable outcome” and pledged to block the deal in the Senate “until Korea completely lifts its ban on U.S. beef.” South Korea banned imports of U.S. beef after mad-cow disease was found in the United States in 2003. That ban is expected to be canceled next month after the World Organization for Animal Health certifies that U.S. beef is safe for export.

The beef issue is probably the least of the pact’s problems in Congress. Both parties have become relatively more protectionist over the past decade, especially Democrats, who now control both chambers. The pact deserves to be approved, but it will not be easy.