FTA Hits Opposition in U.S. Congress

The Economist’s blog reports,

After a long drawn out, and highly fraught, negotiation that pushed right up against the deadline, America and South Korea have inked a new trade deal. It is the largest America has signed since NAFTA. However, tensions between the Bush administration and resurgent protectionists in America’s new Democratic Congress make it highly uncertain that the pact will be ratified.

I don’t yet know if the opposition will be enough to defeat the deal, but some key constituencies are lining up against it. The beef producing states are threatening to block it, and the U.S. Trade Representative is warning South Korea that the deal may not fly unless South Korea fully fully opens its market to beef. Rice producing states are unhappy, and there probably isn’t anything that will mollify them. The farm bureau is withholding its support. The bigger surprise to me is how unhappy the automakers are:

But Rep. Sander Levin, who heads the House Ways and Means subcommittee on trade, said the deal failed to lift Korea’s “iron curtain” on foreign auto imports.

The Democrat from the auto-manufacturing state of Michigan vowed to oppose the agreement unless it was tweaked to ensure “two way trade” in vehicles.

The Automotive Trade Policy Council, which includes the big U.S. manufactures, also said the deal fell short.

“The Korean government missed its last, best chance to undo the protectionist policies that … have kept the Korean auto market off limits,” Steve Biegun, Ford Motor Co.’s vice president for international governmental affairs, said in a statement. [Reuters, Missy Ryan]

The U.S. Chamber of Commerce likes the deal for its terms on financial services and intellectual property rights. What seems most surprising to some — including both myself and Rep. Ed Royce — is the very consideration of products from Kaesong, which could cost the deal conservative votes. On that basis alone, on the take-it-or-leave-it terms on which this deal is offered, I’d leave it.

In the talks’ big surprise, the United States agreed in principle to give certain products from North Korea preferential treatment. That would accede to South Korea’s request that goods it makes in an industrial park just inside North Korea get similar treatment to those made at home. [Reuters, Jack Kim]

When you consider the idea that products from Japan, a staunch and loyal ally, don’t get the same preferential treatment that North Korea’s just might, it’s rather stunning. Why are we so good at incentivizing the worst behavior? But don’t worry, says the U.S. Trade Rep’s office:

Karan Bhatia, deputy U.S. trade representative (USTR), also emphasized that the FTA does not in any way allow goods made in North Korea to enter the U.S. [….]

The trade negotiator said he wants to be “completely unequivocal” that the FTA does not permit goods from North Korea to flow into the U.S. [….]

“This is the kind of thing we do with bilateral partners, regardless of whether we have an FTA,” he said.

“I caution you against reading too much into that.” [Yonhap]

I really don’t know what that means, but the agreement keeps the door to Kaesong cracked open, and South Korea’s Ambassador to the United States certainly reads it that way.  If they’d meant to be “completely unequivocal,” why not just write the agreement that way? Once again, as with the flawed disarmament deal we signed in February, it depends on the depth of your reservoir of trust in our own government. Mine is rather low at the moment.

If Pyongyang were to abide by its agreements, make itself reasonably transparent, abide by basic labor standards … in short, normalize its behavior to basic standards of humanity, I might not oppose such a provision. But Kim Jong Il has done nothing to deserve these stolen wages.

Finally, South Korea’s president has moved from characterizing the FTA as a burden to calling it a “challenge,” and he’s actually responding to its critics on the left, for once:

Roh denounced anti-FTA protestors whose “groundless, exaggerated” arguments “misled the public” and urged them to frame reasonable arguments in the future. [Chosun Ilbo]

If he had said this last May, the deal would be much more comprehensive, but then again, you can’t really argue with the results Korea obtained. This deal is going to be very good for Korean industrial workers, who are well represented in the Korean Confederation of Trade Unions, and until now, the KCTU had staunchly opposed this deal. That will force a very interesting choice between the unions’ self-interest and their reflexive hatred for every interaction with America.

Some anju links:

You Don’t Say, Part 1. Japan says it will be “quite difficult” for the parties to meet their first 60-day deadlines under the Feb. 13th Agreed Framework 2.0. Looming above all of these, of course, is North Korea’s obligation to shut down the crumbling wreck of a reactor at Yongbyon.

You Don’t Say, Part 2. Scott Snyder explains why the Japanese abduction issue won’t be solved at a working group. If you need a fuller explanation of why, it’s here.

Fuel Oil Delivery on Hold. GC Caltex has been picked to supply fuel oil to North Korea, but in an encouraging sign, the ships don’t look set to sail for Nampo unless North Korea actually shuts down the reactor. Let’s hear it for reciprocity.

Fools Rush In. No sooner does Colin McAskill break into a public feud with North Korea over the recovery of his Pyongyang-based bank’s frozen assets, than a new crop of suckers sprouts in the fertile fields of Europe. I believe a commenter predicted this.