The United States and South Korea reached a compromise agreement for the terms of a free-trade agreement originally negotiated back in 2007. President Barack Obama had hoped to reach a compromise agreement in time for the G-20 summit meetings in South Korea last month but the two sides were unable to strike a deal until this weekend. This regional economic integration agreement would represent the largest such agreement by trade volume value since the North American Free Trade Agreement went into effect in 1994. Bilateral trade between the countries was $69 billion last year and the agreement is expected to increase bilateral trade by $10 billion annually. The proposed agreement has the support of many American businesses which want to see the agreement and other such agreements finally enacted, but there is also a substantial amount of opposition to the agreement. Opposition to the agreement by the U.S. automotive industry or by the beef industry may still derail the agreement, which must obtain legislative approval in both countries. As part of the compromise agreement, South Korea agreed to some changes to allow U.S. automobile companies greater access to the South Korean market, a market which has historically been effectively closed to foreign competition, but South Korea did not offer additional concessions for American beef imports.
QUESTIONS FOR DISCUSSION:
- Analyze the benefits and costs of the proposed free-trade agreement between the United States and South Korea. Identify the likely “winners” and “losers” of the agreement.
- President Obama has said the agreement would support at least 70,000 American jobs. Analyze how this agreement would impact American jobs.
- The proposed agreement needs legislative approval in the United States. Discuss the factors that will help or hinder the chances of this agreement obtaining congressional approval with the new Congress to take office in January.
SOURCE: Williamson, E. (2010, December 4). U.S. Sets Landmark New Deal on Trade. Wall Street Journal, pp. A1, A9. Retrievable online at: http://online.wsj.com/article/SB10001424052748703350104575652882154932888.html
Related video clip available at: http://online.wsj.com/video/obama-lauds-south-korean-trade-deal/C5F9FB36-50F7-455C-8899-B0C22562DA92.html