The U.S.-ROK Free Trade Agreement
October 13, 2011
On October 12, the U.S. Congress approved free trade agreements with South Korea, Colombia, and Panama. The House passed the Korea trade deal (KORUS) in a 278 to 151 vote. In the Senate, KORUS passed with 83 in favor and only 15 opposed.
Q1: What is the significance of the agreement for the United States?
A1: The U.S.-Korea Free Trade Agreement or KORUS FTA is the largest bilateral free trade agreement negotiated by the United States and the largest U.S. trade agreement since conclusion of the North American Free Trade Agreement (NAFTA). The agreement will increase U.S. exports to Korea by $11 billion and increase U.S. GDP by $12 billion. According to experts, the KORUS FTA will help to support 70,000 American jobs.
Q2: Why did the agreement take so long to pass?
A2: KORUS was originally concluded during the George W. Bush administration on June 30, 2007. The agreement was not put forward to the Congress during the Bush administration, however. Subsequently—and reversing his earlier opposition—President Obama highlighted the three pending FTAs as an opportunity to create American jobs and strengthen trade relations with South Korea, Panama, and Colombia in his January 2010 State of the Union address. In the United States, KORUS stalled as legislators demanded additional conditions for the automobile and beef sectors and for organized labor. In June 2010, the Obama administration announced its intention to revisit the text negotiated with South Korea by the Bush administration. However, negotiators failed to reach an agreement before the November 2010 G-20 Seoul summit. The United States and South Korea finally agreed on a renegotiated text, signed on December 3, 2010. The United States and South Korea exchanged legal texts on February 10, 2011. However, the agreement was further delayed as congressional Republicans tied its passage to movement on the Colombia and Panama FTAs and as the Obama administration asked for an agreement on extending a program known as Trade Adjustment Assistance (TAA).
Q3: Has the agreement been ratified in Korea?
A3: Not yet. The agreement has gone through committee, but the National Assembly has not yet approved it. Congressional passage of KORUS will compel the Korean legislature to move quickly. The ruling party in Korea currently holds a majority in the legislature.
Q4: What is the broader meaning of the agreement?
A4: KORUS is a prototypical, high-quality free trade agreement. When it was originally negotiated in 2007, many countries appreciated the innovative efforts made to create a deep and strong agreement that cut tariffs across sectors between two large economies. KORUS will provide impetus to a multilateral trade negotiation known as the Trans-Pacific Partnership (TPP), involving the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. The Obama administration’s objective is to ink a framework agreement for TPP by the November 2011 APEC meetings in Honolulu. If successful, KORUS and TPP would constitute substantive and critical steps to eventual formation of a Free Trade Area of the Asia-Pacific (FTAAP).
Q5: Does the agreement have strategic (not just economic) value?
A5: Absolutely. KORUS takes the U.S.-ROK alliance relationship to the next level, integrating the two countries and people not only on security issues through the half-century military alliance, but now across a much wider scope. Broadly, it sends an important message to Asia that the United States, despite its current economic woes, is not moving toward protectionism. U.S. support of free trade in Asia has historically been a key pillar of U.S. leadership in the region.
Victor D. Cha holds the Korea Chair at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
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