Tag Archives: Korean Free Trade Agreement

Good work on free trade 1

Free Trade • Tags:

By John Quiner

President Obama and U.S. trade representatives settled outstanding issues regarding the Korean Free Trade Agreement (KORUS FTA) with South Korea. The trade deal is expected to increase annual exports of American goods by up to $11 billion and support at least 70,000 American jobs.

KORUS FTA was proposed during the Bush administration in 2007, and is now ready to be sent to Congress. Advocates of the agreement seek lowered Korean import tariffs, which they say will help reduce the U.S. trade deficit, and create jobs for America. Various roadblocks have staggered the agreement’s progress.

Free trade agreements like the North American Free Trade Agreement generally stipulate lower tariffs on imports to the respective countries involved. The main goal of the agreement is to lower tariffs, which would in turn help reduce the United States’ trade deficit.

The idea is that because Korea has a growing $1 trillion economy, ratification of the KORUS FTA would stimulate economic growth in a wide range of industries including the pork and auto industry. According the to The Foreign Agriculture Service website, the U.S. provides about 30 percent of Korean agricultural imports, which would increase significantly if Congress ratifies it.

Advocates of the KORUS FTA say that it would be a good implementation for the U.S. because it would reinforce South Korea’s position as a strategic ally for the U.S. in the Pacific Northeast.

The biggest trade barrier that stands right now is the existence of tariffs on U.S. imports, as is the case with most U.S. trade countries that don’t have a trade agreement. According to the Iowa Pork Producers website, Korea is currently the sixth largest pork export market in the world, and Japan has the largest pork market. The Iowa Pork producers also say that South Korea could jump to the number one slot for pork exports if the agreement gets ratified.

According to Foreign Agriculture Service website, failure to ratify the agreement would mean a significant loss of market share to U.S. competitors who have implemented FTAs with Korea. The list includes the European Union, Chile and India. Korea is also negotiating new agreements with New Zealand, Canada, China and Australia.

Up until this point, the public question had been: What is the big holdup? David Spooner, the former Assistant Secretary of Commerce of the Import Administration, helped negotiate the trade during the Bush administration. He said that there were three sectors that were against the agreement, and holding it up.  The textile industry was opposed to the agreement for fear of competition from China. According to Spooner, the main concern was that Chinese textile producers would try to export products to Korea and pass them off as American.

The second sector that was holding out against the agreement was the auto industry. Until the outlines of the agreement were changed this week, South Korea had tougher emissions standards making it more difficult for American car producers to export cars to Korea. The United States exported 7,663 automobiles to South Korea in 2009 while it imported 476,857 from automakers there, according to U.S. Commerce Department figures. If the agreement were to pass, the auto industry would have had a hard time profiting. Ford Motor Company had been leading the opposition to the agreement, but is now satisfied with the revisions.  Alan Mulally, CEO of the Ford Motor Company said Friday that Ford deeply appreciates the tireless efforts of the Obama administration and Congress to improve this agreement and open the Korean auto market.

The third sector that was holding up the agreement, according to Spooner, was the beef industry. President Lee Myung-bak’s decision in April 2008 to allow imports of all cuts of beef and beef products caused a lot of protest from South Koreans. This happened in response to the 2003 Mad Cow Syndrome scare. It currently stands that South Korea will not allow U.S. beef imports older than 30 months to enter the country because of the mad cow scare.  On Monday, Obama said he recognized it would be tough for Lee to fully open the Korean market to U.S. beef exports, given the scare over mad cow disease several years ago. The beef industry is still opposed to the agreement, because there have not been significant changes made.

The biggest aspect of the KORUS FTA that appeals to Iowans concerns the pork industry. In a time where the national unemployment rate is hovering above nine percent, everyone is concerned about creating jobs. According to Department of Commerce figures, every billion-dollar increase in U.S. exports creates 20,000 jobs. If the agreement were to be passed, 90 percent of U.S. pork exports to Korea will become duty free by 2014. This means that the current tariff rates of 22.5 and 25 percent will be reduced to zero.

According to the official government trade website, this agreement will benefit Iowa in many ways. They say that Iowa exported an average of $139 million in goods to Korea between 2007 and 2009, which will increase significantly.  The website also says that exports of manufactured goods support an estimated 138,000 jobs in Iowa, which will also increase if the agreement is ratified.

[TOM QUINER'S NOTE: Quiner's Diner is frequently critical of the President. We commend him for getting this job-creating bill ready for ratification. Although we would have liked to have gotten it implemented sooner, the treaty offers some improvements over the version written by President Bush's negotiators. Thanks to John Quiner for his reporting on this issue.]

Grassley knows how to create jobs. Obama doesn’t. 1

Free Trade, Politics, the Economy • Tags: , ,

When President Obama was sworn in as President, America’s unemployment rate was 8.5 percent.  Fifteen months later, it had climbed to 10.2 percent.

When President Obama was sworn in as President, Iowa’s unemployment rate was 6.2 percent.  Fifteen months later, it had climbed to 7.4 percent.

The President’s economic initiatives aren’t producing jobs.

I wrote the piece that follows for the Des Moines Register last December.  It appeared on December 13th, 2009.  The piece was based on a telephone interview I had with Senator Charles Grassley.  Senator Grassley presented a proven path to job creation:  an expansion of free trade.  Specifically, the Senator discussed the merits of the pending Korean Free Trade Agreement.

The bill has been held up by Democratic Party politics.

Since then, unemployment for the U.S. has increased a half a percent  and the unemployment rate for Iowa has increased even more.

While Democrats dither, Iowans are losing their jobs.

The President believes increased taxes, increased government spending, and increases in government regulation are the path to job creation.  He said as much this week when he was in Iowa.

There are legitimate pros and cons to pending Wall Street reform, but they’re not the key to job growth.

Free trade is.  And it doesn’t increase our taxes.  It doesn’t increase government spending.  And it doesn’t increase government regulation.  Senator Grassley gets it.  He’s worked in the private sector.

The President is too beholden to unions and Democratic Party pressure groups to advance the Korean Free Trade Agreement.

He doesn’t get it.  Our job as voters is to promote the positive message of free trade to the rest of our congressional delegation.

Iowa needs jobs.  Read the piece that follow for details.  Then get on the phone and call your representatives in Congress to support the Korean Free Trade Agreement.

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How to create more jobs for America Reply

Free Trade, the Economy • Tags: , ,

As seen in the Des Moines Register on December 13, 2009

America needs more jobs. 

Unemployment is killing us. I know of so many people who have lost their job and many of those still employed feel insecure.

The President held a “jobs summit” to look for solutions.

I don’t trust the President’s judgment when it comes to creating jobs.  He’s never run a business or even worked in the business sector. In fact, he is openly adversarial to the private sector.

What does he believe in?  Higher taxes on oil companies.  Higher taxes on capital gains.  Higher income taxes for high income earners.  More government regulations on practically everything.  Budget-busting stimulus packages.

His ideas aren’t creating jobs.  They deter job creation because they increase the cost of doing business.  They increase the risk associated with running a business.

The President and his party could do something very practical right now to create jobs:  approve the Korea Free Trade Agreement.

South Korea is a huge market for manufacturing, services, and especially agriculture products.  The upside to the agreement is substantial.

The man who helped negotiate the treaty in 2007 was in Des Moines over Thanksgiving.  David Spooner was Assistant Secretary for Import Administration under President Bush.  He told me: “The Korean agreement would reduce our trade deficit.  As we try to pull out of our recession, it should be a no-brainer to pass a trade bill that will reduce our trade deficit.  The average job linked to exports earns 17% more than the non export-related jobs.  The trade agreement would promote quality jobs.”

Did you know Korea is the sixth largest export market for pork?  Japan is number one.  But according to the Iowa Pork Producer’s website, pork exports to Korea could surpass Japan’s once the treaty is fully implemented.  Even more, they project the agreement would give our pork producers an increase of $10 per hog marketed.

This is good news for Iowa.

Iowa Congressman, Leonard Boswell, supports the treaty:  “The U.S. – South Korea Free Trade Agreement is a significant opportunity for Iowa as an agricultural commodity state and the home of agriculture manufacturing companies.”

I talked to Senator Grassley about the bill.  He called the agreement “vital”, even more important that the one we have with Canada, who is our biggest trading partner.  He pointed out that the U.S. converted trade deficits into surpluses after implementation of trade agreements with Chile, Morocco, Bahrain, Oman, Central America, and the Dominican Republic.

After implementation of agreements with Singapore, Australia, and Peru, our trade surpluses with those countries got even bigger.  And Korea is a much bigger trading partner than any of these.  The upside is off the charts.  Grassley quotes Department of Commerce figures that tell us every billion dollar increase in U.S. exports create 20,000 jobs.

Free trade is good for America generally and Iowa specifically.

The treaty is negotiated.  The work is done.  So what’s the hold up?

Democratic Party politics.

Representative Boswell’s support notwithstanding, President Obama and his party are  dragging their feet.  They want to go back to the drawing board on this agreement to appease Big Labor who want more protectionism built into the agreement.

There’s no time to dither.  Senator Grassley points out that the European Union has just initialed their own trade agreement with Korea.  In a letter to President Obama, Senator Grassley says:  “If we fail to implement our pending trade agreements promptly, we will place our producers and their workers at a serious competitive disadvantage.  It would be both senseless and irresponsible for us to do so.”

Let’s set politics aside and support policies that really create jobs.  The Korea Trade Agreement is the perfect place to start.