(From the Special Report Rubber's Global Footprint: Focus on South Korea from the May 30, 2011, issue of Rubber & Plastics News)
SEOUL, South Korea—The free trade agreement between South Korea and the U.S., which proponents believe will spark a major increase in bilateral trade between the two nations, remains stalled.
In the works since 2006, the deal was signed in 2007, renegotiated and signed again in December 2010. The Republic of Korea-United States Free Trade Agreement—known as KORUS FTA—would reduce about 95 percent of the tariffs between the two nations, represent South Korea's second-largest free-trade pact and be the first by the U.S. with an Asian nation.
That is, if the U.S. Congress and South Korean National Assembly ratify the agreement.
The first deal, during the George W. Bush presidency, was halted by concerns over automobiles and beef exports. The latest, signed by President Obama and his South Korean counterpart, Lee Myung-Bak, in December, ironed out via compromise questions concerning automobile imports/exports, but has run into a political wall.
Generally, business interests in both countries favor the agreement; citizens groups and labor organizations do not.
The U.S. International Trade Commission, an independent federal agency, estimates the free-trade pact would result in a rise in U.S. exports to South Korea of between $9.7 billion and $10.9 billion annually. The independent federal agency mentions rubber products as one category that would see an increase in U.S. exports.
The commission predicts imports into the U.S. from South Korea would grow between $6.4 billion and $6.9 billion.
The U.S. Chamber of Commerce has stated the free-trade agreement could create as many as 70,000 jobs. The liberal think tank Economic Policy Institute estimates the pact would cost 159,000 U.S. workers their jobs.
The ITC sees no negligible change in U.S. employment resulting from the agreement.
The politics have lined up along ideological lines, and not entirely in concert with the Obama administration. One issue brought up by labor and its supporters is the need for renewal of the expired Trade Adjustment Assistance program, which provided re-education and training to workers who lost their jobs because of increased imports.
Without renewal of TAA, the Democrats haven't supported KORUS FTA and similar pacts with Panama and Columbia. However, the Republicans refuse to bring back TAA.
How do companies in the polymer industry view the impact of KORUS FTA? Jim McGinley, executive vice president, business management at South Korea's Songwon Industrial Co. Ltd., expects the agreement would help.
“The free trade agreement should bring down barriers allowing U.S. companies to be more competitive in South Korea and allow South Korean companies to be more competitive in the U.S.,” according to the executive. That would benefit the firm's customers, he said.