Obama inks South Korea free-trade agreement

posted at 12:55 pm on December 6, 2010 by Ed Morrissey

When Barack Obama came back empty-handed from his trip to South Korea, we noted the failure to get a free-trade agreement as a major and embarrassing failure.  Over the weekend, though, the administration announced that the US and the RoK had finalized an agreement on free trade, and that Obama would push hard for quick ratification.  However, a question on beef exports might induce at least one influential Democrat in the Senate to balk (via The Week):

President Barack Obama vowed at the weekend to work with Republicans and Democrats to pass a free-trade pact with South Korea that he said was a model for future agreements he would seek in Asia and around the world.

U.S. and South Korean negotiators struck a deal on Friday on the long-delayed pact, which was signed in 2007 but had not been ratified for three years because of U.S. auto and beef industry concerns.

The pact was an accomplishment for Obama, who faced an embarrassing setback when negotiators failed to settle their differences before he visited Seoul last month, but it was greeted less positively in South Korea.

Politicians in Seoul are less than impressed with the US position on autos, but they only have themselves to blame.  The US will keep in place its 2.5% tariff on auto imports from South Korea, while South Korea will halve their own import duties on American autos — but those tariffs start at 8%.  They want to see action on the US to lower tariffs immediately, but still keep their tariffs at a higher rate than ours.  That doesn’t sound like solid ground for obstruction in Seoul, and the opposition will probably have a tough time arguing against the agreement on that basis.

However, that may not be true in the US.  The beef industry expected the US to open the market for exports with a bilateral agreement, but the agreement mainly addresses autos.  Seoul will still block beef from livestock older than 30 months, claiming concern over mad-cow disease controls in the US, even though that has never been an issue for domestic producers.  ABC News reports that Senator Max Baucus (D-MT) may block ratification on those grounds:

Officials point out that the FTA calls for all tariffs on U.S. beef to be eliminated.

The problem is, the South Koreans still won’t let any U.S. beef products into their country from an animal older than 30 months. Why? It can all be traced back to the “mad cow” outbreak of 2003. South Korea shut down imports then and when they resumed in 2008 political protestors took to the streets. …

[T]he office of Montana Sen. Max Baucus is signaling that unless his concerns are answered he may opposed [sic] passage of the agreement. One of those concerns is the ban on beef over the age of 30 months.

The industry actually agreed to this restriction in 2008 in order to get a deal made during George Bush’s administration — a deal that Democrats blocked.  Even without it, the US beef industry has regained its market share in South Korea over the past seven years.  If the deal is good in other regards, then the US can build on it to break down other barriers as well.  But if the Democrats back this version of the free-trade agreement, they’ll have difficulty in explaining why they didn’t just pass the agreement under Bush and give that process an extra two years to have made that kind of progress already.


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Is this a new market to hemorrhage jobs to?

Inanemergencydial on December 6, 2010 at 12:58 PM

Is this a new market to hemorrhage jobs to?

Inanemergencydial on December 6, 2010 at 12:58 PM

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

Just more bullcrap from governmental drones.

Free Trade means exactly what it says: no restrictions on either side.

When advantage is given one side or the other, it isn’t “free,” but the continuation of protectionism.

As usual, Obama gets it horribly wrong. This, like his START “agreement,” is grandstanding from someone who has been played for a sucker throughout the world.

The Senate should oppose this on the grounds of common sense, not because some beef-state Senator gets his knickers in a twist.

MrScribbler on December 6, 2010 at 1:02 PM

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

Can you pack a few more assumptions into your critique of my comment?

Inanemergencydial on December 6, 2010 at 1:02 PM

Is this a new market to hemorrhage jobs to?

Inanemergencydial on December 6, 2010 at 12:58 PM

Yes, it’s an exciting new frontier for outsourcing US jobs. After all, the US auto industry is dying for greater access to a small auto market in exchange for the chance to compete with even cheaper Korean autos here in the US. But don’t worry about any jobs lost. You’re protecting one of the great principles enshrined by our founding fathers- free trade.

bayam on December 6, 2010 at 1:03 PM

The real story is the ignorant mania surrounding Bovine spongiform encephalopathy.

Inanemergencydial on December 6, 2010 at 1:07 PM

Free Trade means exactly what it says: no restrictions on either side.

Or as Warren Buffet would say, the US prefers semi-trade. We buy $1 trillion of products from a country that in turn buys $500 billion of our products. The balance is taken in cash- literally a rain check for US assets. If you listen closely, you can hear the sound of wealth draining out of the US to China and other creditor nations.

bayam on December 6, 2010 at 1:07 PM

they’ll have difficulty in explaining why they didn’t just pass the agreement under Bush

BDS, pure and simple….

cmsinaz on December 6, 2010 at 1:11 PM

and they will have the msm to inconviently forget that little tidbit…

cmsinaz on December 6, 2010 at 1:12 PM

Are the new Kia and Hyundai US plants subject to the tariff?

faraway on December 6, 2010 at 1:19 PM

Jeez. Barack Hussein Obama fails at everything. He can’t even get a simple free-trade agreement right.

FlatFoot on December 6, 2010 at 1:20 PM

But if the Democrats back this version of the free-trade agreement, they’ll have difficulty in explaining why they didn’t just pass the agreement under Bush…”

Explained quite easily. Barry isn’t Bush. See how easy that was?

GarandFan on December 6, 2010 at 1:23 PM

I totally feel like He is restoring our place in the world.

SlimyBill on December 6, 2010 at 1:24 PM

Whatever. He probably hasn’t even read it.

Hummer53 on December 6, 2010 at 1:26 PM

My new LG refrigerator, and Samsung washer and dryer, would like to thank President Obama for doing his part to continue to drive a stake through into U.S. manufacturing jobs. Now we’ll be able to borrow money for his social programs from SoKo, too.

What… your union handlers aren’t contributing enough? Maybe because unions are losing $$$ clout, thanks to the expensive, shoddy products they’ve caused… from home appliances to cars.

VastRightWingConspirator on December 6, 2010 at 1:29 PM

I totally feel like He is restoring our place in the world.

SlimyBill on December 6, 2010 at 1:24 PM

Yeah, like that time when our place in the world was to be a mocked and despised upstart rebel colony.

Good times. Good times.

Lily on December 6, 2010 at 1:36 PM

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

I just have trouble believing that this is real. Everything Obama does, he seems to have an ulterior motive.

jeffn21 on December 6, 2010 at 1:42 PM

My new LG refrigerator, and Samsung washer and dryer, would like to thank President Obama for doing his part to continue to drive a stake through into U.S. manufacturing jobs. Now we’ll be able to borrow money for his social programs from SoKo, too.

Here is a list of kitchen appliances still made in the USA. If you bought an LG refrigerator, you are part of the problem about which you complain.

MayBee on December 6, 2010 at 1:48 PM

If you listen closely, you can hear the sound of wealth draining out of the US to China and other creditor nations.

bayam on December 6, 2010 at 1:07 PM

Not unlike what happened to England, isn’t it? Just instead of tea, we’re addicted to cheap plastic goods. They figured out how to drain one empire and they’re doing it again.

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

Since the current definition of “free markets” is as analogous to the definition of “marksmanship” as a blind man with a machine gun on a merry-go-round, yeah, sensible conservatives are opposing it. Glad to see some on this very thread.

Dark-Star on December 6, 2010 at 1:48 PM

Obama renegotiated the treaty to add extra protections for UAW members. It is worse for America and and worse for the environment than it was before.

Today at a community college in Winston-Salem, NC, Obama declared we “must do whatever is necessary to get economic growth going again.”

We stand ready to accept his resignation, along with that of his cabinet, “czars,” and the Democratic leadership in the House and Senate. It won’t be a miracle cure, but it will be a darned fine start.

Adjoran on December 6, 2010 at 2:03 PM

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

Sometimes I sit back in my chair and just shake my head at how stupid some posts are…of course without reading the bill, without any real knowledge of what the bill states, what this trade agreement is for, you have no idea, yet you post that nonsensical comment. And it is apparent you have no understanding of international “free markets”, especially when it is free to them, and pads the coffers of congress.
I am sure you sat back, looked at what you typed and smugly thought “Brilliant”.
Tell us, you dropped out of economics after the third day…

right2bright on December 6, 2010 at 2:05 PM

Dark-Star on December 6, 2010 at 1:48 PM

I don’t think we should oppose international free trade among relative equals like SOKO. If a nation has comparable wages and environment regulation and are truly interested in free trade then we should, but if they engage in tariff’s, subsidizing, VAT games, or currency manipulation, then we need to actively protect our business sector from them.

The truth is that the only countries willing to engage in free trade are the ones that can swamp up with virtual slave labor, and no environmental regulations. The equals play games. Japan, and Brazil are both manipulating their currencies to keep them low against the dollar, and Europe engages in both a VAT disparity and subsidies.

DFCtomm on December 6, 2010 at 2:09 PM

You all do realize that every infected cow with BSE originated in CANADA?

I believe the tariff on our beef is at 40%.

S. Koreans are here in ND trying to start a feed lot for them.
So they do want our beef.
And so I ask again, why doesn’t the federal govt let companies test all of their beef for BSE like customers in Japan wanted?
Why is that a problem?
I’m really not quite sure why there is a 40% tariff on our beef.
Anyone know?

Badger40 on December 6, 2010 at 2:33 PM

BTW-there’s no such thing as ‘free trade’.
For instance, why is it OK for Canadians to use drugs in cattle that are banned here in the US & then why are those animals imported here for Americans to eat?
Fence posts: Canadians are allowed to use chemicals to treat wooden fence posts that are banned in the US.
And then they are shipped & sold here.
Why is that OK?
So you see, with examples like this, there really is no free trade.
Bcs those people in other countries do not have to paly by the same rules as we do.
The govt shackles me with rules & regs to make it less & less profitable for me to produce a product.
I’m not saying there shouldn’t be some rules & regs.
Look at what happened with melamine.
I would just like foreigners to be able to buy my product if they wish.
And I guess if Americans want to buy foreign beef, let them.
But you have to equalize the disparities somehow.
I don’t know if tariffs are the only answer.

Badger40 on December 6, 2010 at 2:38 PM

Is this a new market to hemorrhage jobs to?

Inanemergencydial on December 6, 2010 at 12:58 PM

Conservatives hate free markets too, now?

rightistliberal on December 6, 2010 at 1:00 PM

and just what about this bailed-out out monster are we calling “free”?

Osis on December 6, 2010 at 2:51 PM

DFCtomm on December 6, 2010 at 2:09 PM

What do you mean by “comparable”, is $5 an hour in Korea comparable.
This is why the gov. is bloated, they pass these bills then have hundreds of people working on details, then hundreds auditing companies so they don’t break the rules and hundreds to enforce them.
The problem is…you have a rookie, a very naive and not real bright man trying to lead a nation. And the international economics is tricky and dicey…it won’t be good whatever he puts together because he just isn’t bright enough.

right2bright on December 6, 2010 at 2:53 PM

Just instead of tea, we’re addicted to cheap plastic goods.
Dark-Star on December 6, 2010 at 1:48 PM

Isn’t it amazing how NOTHING is made worth a damn anymore?
I bought a X-mas tree stand bcs my good metal one got run over by the tractor last year & all they had was plastic POSes from China.
So I bought it bcs I had little choice at the time & lo & behold something was wrong with it already.
I for one am one of those rising # of consumers who is looking for QUALITY made goods that will LAST, like stuff USED to.
So anyone with good product reccomendations would be a blessing.

Badger40 on December 6, 2010 at 3:15 PM

Isn’t it amazing how NOTHING is made worth a damn anymore?
I bought a X-mas tree stand bcs my good metal one got run over by the tractor last year & all they had was plastic POSes from China.
So I bought it bcs I had little choice at the time & lo & behold something was wrong with it already.
I for one am one of those rising # of consumers who is looking for QUALITY made goods that will LAST, like stuff USED to.
So anyone with good product reccomendations would be a blessing.

Badger40 on December 6, 2010 at 3:15 PM

This is true of everything. You can’t buy quality now at any price. Everything is made in the same way in the same place. There are no alternatives only different brand names.

DFCtomm on December 6, 2010 at 3:22 PM

If people understood trade, they would know that it is in OUR interests to remove all import tariffs no matter what other nations do. It means we get lower goods from overseas and that is to our advantage. Eventually, the other nations will come to their senses and see that they are sending us real value for debt obligations known as money and realize that trade barriers serve only to screw themselves. Friedman had it exactly right!

But then again, unions hate Milton Friedman. He is for (and they against) free markets and free trade and freedom!

MJBrutus on December 6, 2010 at 3:36 PM

Clara Peller in
Where’s the Beef!
Thanks for the memories of 1984, Ed.

Brat on December 6, 2010 at 3:47 PM

If people understood trade, they would know that it is in OUR interests to remove all import tariffs no matter what other nations do. It means we get lower goods from overseas and that is to our advantage. Eventually, the other nations will come to their senses and see that they are sending us real value for debt obligations known as money and realize that trade barriers serve only to screw themselves. Friedman had it exactly right!

But then again, unions hate Milton Friedman. He is for (and they against) free markets and free trade and freedom!

MJBrutus on December 6, 2010 at 3:36 PM

We’re reserve currency for the world. They don’t get debt obligations, they get money. They don’t accumulate a massive amount of currency that can only be used in the country of origin, and worthless anywhere else.

DFCtomm on December 6, 2010 at 3:54 PM

We’re reserve currency for the world. They don’t get debt obligations, they get money. They don’t accumulate a massive amount of currency that can only be used in the country of origin, and worthless anywhere else.

DFCtomm on December 6, 2010 at 3:54 PM

I don’t follow you. Money is a debt obligation. That includes “reserve currency.” And money ultimately can only be used in the country of origin (including reserve currency). That is why they use the reserve currency they accumulate to spend here. The problem is that they spend too much of it to buy our debt (not their fault, but that of our government which keeps selling debt to support its incontinent spending) instead of our goods or investing it here.

MJBrutus on December 6, 2010 at 4:00 PM

If people understood trade, they would know that it is in OUR interests to remove all import tariffs no matter what other nations do. It means we get lower goods from overseas and that is to our advantage. Eventually, the other nations will come to their senses and see that they are sending us real value for debt obligations known as money and realize that trade barriers serve only to screw themselves. Friedman had it exactly right!

But then again, unions hate Milton Friedman. He is for (and they against) free markets and free trade and freedom!

MJBrutus on December 6, 2010 at 3:36 PM

The problem we have is that the pain of free trade is concentrated and visible to detractors, like the closed factory and unemployed union ‘workers’. The benefit on the other hand is lower costs for the rest of us and a higher standard of living, and that benefit is very thin and widely distributed and hard to put into a typical tv news soundbite.

slickwillie2001 on December 6, 2010 at 4:05 PM

I don’t follow you. Money is a debt obligation. That includes “reserve currency.” And money ultimately can only be used in the country of origin (including reserve currency). That is why they use the reserve currency they accumulate to spend here. The problem is that they spend too much of it to buy our debt (not their fault, but that of our government which keeps selling debt to support its incontinent spending) instead of our goods or investing it here.

MJBrutus on December 6, 2010 at 4:00 PM

What do you think the mechanism actually is that is used to peg currency. How is it done?

DFCtomm on December 6, 2010 at 4:14 PM

What do you think the mechanism actually is that is used to peg currency. How is it done?

DFCtomm on December 6, 2010 at 4:14 PM

Monex

MJBrutus on December 6, 2010 at 4:18 PM

The problem we have is that the pain of free trade is concentrated and visible to detractors, like the closed factory and unemployed union ‘workers’. The benefit on the other hand is lower costs for the rest of us and a higher standard of living, and that benefit is very thin and widely distributed and hard to put into a typical tv news soundbite.

slickwillie2001 on December 6, 2010 at 4:05 PM

I love the fact that you’re willing to sell you’re fellow Americans down the river so that you can buy a flat screen tv cheap. Free trade is suppose to help the established economy by creating other established markets in the future at the cost of economic pain in the present. The ideal is that at some vague point in the future that China will be an established economy with a comparable standard of living, and thus a trade partner for our products. That of course is assuming that once China becomes an established economy that they will love free trade as much as they do now.

DFCtomm on December 6, 2010 at 4:20 PM

DFCtomm on December 6, 2010 at 4:20 PM

Open trade borders results in a healthier economy and that means those who you say are being “sold down the river” really aren’t. Cheaper Chinese goods here means that we have more money to spend on other domestic goods. It also means that we will do what we can to be more competitive, a tendency that is stifled by protectionism. It also means that those who earn less can still live more comfortably because those cheaper foreign good are available (can you say Wallmart?).

MJBrutus on December 6, 2010 at 4:25 PM

And another few points about China. China is a net importer on a vast scale. They don’t import much from us, but they do from elsewhere. They keep their people dirt poor to both repress them politically and to keep the profits for themselves. Their economy is horribly dishonest, corrupt and environmentally destructive. Finally, like all centrally directed economies theirs is terribly inefficient. This is not a model to imitate by any means!

MJBrutus on December 6, 2010 at 4:31 PM

Open trade borders results in a healthier economy and that means those who you say are being “sold down the river” really aren’t. Cheaper Chinese goods here means that we have more money to spend on other domestic goods. It also means that we will do what we can to be more competitive, a tendency that is stifled by protectionism. It also means that those who earn less can still live more comfortably because those cheaper foreign good are available (can you say Wallmart?).

MJBrutus on December 6, 2010 at 4:25 PM

Did you even read what I said. The theory of international free trade isn’t to supply you with cheap $hit. It’s to create future markets for established economies. That’s the theory at least.

DFCtomm on December 6, 2010 at 4:34 PM

My new LG refrigerator, and Samsung washer and dryer, would like to thank President Obama for doing his part to continue to drive a stake through into U.S. manufacturing jobs. Now we’ll be able to borrow money for his social programs from SoKo, too.

What… your union handlers aren’t contributing enough? Maybe because unions are losing $$$ clout, thanks to the expensive, shoddy products they’ve caused… from home appliances to cars.

VastRightWingConspirator on December 6, 2010 at 1:29 PM

Hooey. Its great that we can buy cheaper stuff form SoKo. If people wanted to pay more for higher quality, suppliers would respond, but we don’t. The problem is not that they sell us stuff, the problem is that the profits they earn are spent to buy our government debt instead of our goods or instead of investing in our economy. What difference does it make if Hyundai opens a new auto plant in the US or if GM does? I mean aside from the labor unions getting fatter at our expense if its a GM plant.

MJBrutus on December 6, 2010 at 4:38 PM

And another few points about China. China is a net importer on a vast scale. They don’t import much from us, but they do from elsewhere. They keep their people dirt poor to both repress them politically and to keep the profits for themselves. Their economy is horribly dishonest, corrupt and environmentally destructive. Finally, like all centrally directed economies theirs is terribly inefficient. This is not a model to imitate by any means!

MJBrutus on December 6, 2010 at 4:31 PM

You think that might also have something to do with attempting to hinder their internal markets from progressing? Thus ensuring their continued position as a huge net exporter, and continuing to thwart the theory of international free trade?

DFCtomm on December 6, 2010 at 4:39 PM

Did you even read what I said. The theory of international free trade isn’t to supply you with cheap $hit. It’s to create future markets for established economies. That’s the theory at least.

DFCtomm on December 6, 2010 at 4:34 PM

The theory is to expand markets for all producers and thus raise the standard of living for all workers. The way to do that is to remove barriers to trade. If the other side erects them, do not respond. It will ultimately hurt them not us.

Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports.

The misleading terminology we use reflects these erroneous ideas. “Protection” really means exploiting the consumer. A “favorable balance of trade” really means exporting more than we import, sending abroad goods of greater total value than the goods we get from abroad. In your private household, you would surely prefer to pay less for more rather than the other way around, yet that would be termed an “unfavorable balance of payments” in foreign trade.

by Milton Friedman and Rose D. Friedman

MJBrutus on December 6, 2010 at 4:43 PM

Thus ensuring their continued position as a huge net exporter, and continuing to thwart the theory of international free trade?

DFCtomm on December 6, 2010 at 4:39 PM

I’ll repeat, read slowly and aloud if it helps: China is a huge net importer!!!

MJBrutus on December 6, 2010 at 4:46 PM

The theory is to expand markets for all producers and thus raise the standard of living for all workers. The way to do that is to remove barriers to trade. If the other side erects them, do not respond. It will ultimately hurt them not us.

MJBrutus on December 6, 2010 at 4:43 PM

You’re almost there. Think about that for a minute, and you might make it past rote learning. Why will it ultimately hurt them and not us, and why does our status as reserve currency render that pain nearly obsolete? I would stay and expand on this ideal, but I’m running late for a wake.

DFCtomm on December 6, 2010 at 4:54 PM

I’ll repeat, read slowly and aloud if it helps: China is a huge net importer!!!

MJBrutus on December 6, 2010 at 4:46 PM

They don’t import much from us
MJBrutus on December 6, 2010 at 4:31 PM

I guess that makes it a relative term. Now I’ve got to go.

DFCtomm on December 6, 2010 at 4:57 PM

You’re almost there. Think about that for a minute, and you might make it past rote learning. Why will it ultimately hurt them and not us, and why does our status as reserve currency render that pain nearly obsolete? I would stay and expand on this ideal, but I’m running late for a wake.

DFCtomm on December 6, 2010 at 4:54 PM

Our status as a reserve currency simply means that our dollars may make more stops overseas as it wends its way back to the US. That does not effect the trade equation in any meaningful way. It ultimately hurts the party with the tariff because they will pay more for goods than we will. Just as Friedman said in the material I copied and posted for you. Sorry if you don’t like my borrowing from the mind from who I learned but I’m not nearly smart enough to have thought of it myself.

P.S. I’m sorry for your lose, whoever that may be.

MJBrutus on December 6, 2010 at 5:00 PM

Our status as a reserve currency simply means that our dollars may make more stops overseas as it wends its way back to the US.

MJBrutus on December 6, 2010 at 5:00 PM

Why would a reserve currency ever have to come back?

P.S. I’m sorry for your lose, whoever that may be.

Thanks, now I’ve got to run.

DFCtomm on December 6, 2010 at 5:07 PM

I guess that makes it a relative term. Now I’ve got to go.

DFCtomm on December 6, 2010 at 4:57 PM

Relative to what they export to us, they don’t import much from us. On balance, however they are a huge net importer, but not a large importer from the US.

MJBrutus on December 6, 2010 at 5:10 PM

Why would a reserve currency ever have to come back?

DFCtomm on December 6, 2010 at 5:07 PM

Because it is an obligation on the US government. Let’s say that it never does come back. Well that means that we received some goods and services from abroad and in exchange we sent a piece of paper overseas that never returns. As long as the good or service was worth more than the piece of paper and ink, outstanding we got something for nothing!

MJBrutus on December 6, 2010 at 7:28 PM