By Lee, B. J.
Newsweek International , Vol. 151, No. 23
Byline: B. J. Lee
America and South Korea have much to gain from their big trade deal, but may kill it for silly reasons.
A year ago, Seoul and Washington cheerfully celebrated the signing of a trade deal that looked like a major victory for the friends of globalization. This deal opens doors between top trading powers that already deal heavily with each other. America is South Korea's second largest trading partner, and South Korea is America's seventh largest. For Washington, this would be the biggest deal since Bill Clinton closed the North American Free Trade Agreement in 1994. Struck after 14 months of tug-of-war negotiations, it would further reduce tariffs and other barriers, widening a trade channel that Asian rivals of South Korea, like Japan and China, would likely feel compelled to match--giving global trade new momentum at a time when multilateral global-trade talks at the WTO are stalled.
That was then. A year later, a backlash in both capitals threatens to scuttle the ambitious accord. Playing to a surge in public support for trade protection, Barack Obama and Hillary Clinton, the final Democratic contenders for the U.S. presidency, oppose congressional ratification of the FTA, citing its damage to American manufacturers, particularly automakers. And in South Korea the passion is even stronger: every night thousands of citizens stage candlelight vigils to protest their government's recent decision to allow U.S. beef imports, which they claim are prone to mad-cow disease. Amid the growing anti-American sentiment, opposition parties have joined hands to keep the National Assembly from approving the FTA. "In both countries, the FTA issue is being politicized," says Huh Yoon, a trade expert at Seoul's Sogang University. "Despite its economic benefits, political motives threaten to kill the deal."
It would be a costly failure. For Korean manufacturers the deal would mean easier access to the United States, their No. 2 export market, after China. Higher exports of autos, electronics and textiles could add 6 percent to South Korea's GDP by 2018, according to government forecasts. On the American side, farmers and cattle growers as well as banking and other service providers would gain. Experts believe that the U.S.-Korea agreement could also grease the wheels of commerce across the Pacific, as the deal will force Japan and China to lower their trade barriers against the United States. "Through the FTA with Korea, the U.S. can increase its presence in the whole of Asia," says Chang Jae Chul, a researcher at the Samsung Economic Research Institute. …