Editorial: The doors to South Korea

In the view of Ambassador Lee Tae-Sik, the proposed free-trade agreement between South Korea and the United States offers the greater short-term bounty to the United States.

Lee, Seoul's top envoy to Washington, suggested that "tearing down the barriers to each other's markets" would bring near-term pain to many of his country's industries - particularly agriculture, which has enjoyed the protection of 40 percent tariffs. He also pointed out that Korean automakers were opposed to the proposed U.S.-Korea pact, which would be the largest free-trade agreement since NAFTA. At the moment, South Korea exports about 700,000 cars to the United States each year - with only about 5,000 being shipped the other way.

Despite the potential economic convulsions that might be caused by weaning Korea's economy from protectionist policies, Lee said there was a strong consensus within the business community that his nation's long-term vitality required such steps to make its industries more efficient and competitive. In a meeting with The Chronicle's editorial board Monday, Lee cited the country's high-wage scales and inefficient agriculture sector as potential competitive disadvantages for South Korea.

For the United States, the agreement would greatly expand access to the world's 12th largest economy. But, as always, the unleashing of free markets generates winners and losers - and protectionist instincts.

This proposed agreement is going to be a major test of the ability of the Democratic-controlled 110th Congress to balance the concerns of Detroit against the broader benefits to the U.S. economy. While the Korean pact eliminates the 8 percent tariff on imported passenger cars, the U.S. automakers had wanted the deal to go a step further by guaranteeing them a share of the market. As Lee correctly noted, the notion of assured market share is inconsistent with the concept of free trade.

Regrettably, politics may be playing a part in the Democratic resistance to a deal negotiated by the Bush administration.

The United States has dropped to third among South Korea's trading partners, falling behind China and Japan. While no free-trade deal is without pain, this one certainly improves the status quo by breaking down barriers to South Korea's trillion-dollar economy

Source: San Francisco Chronicle
August 28, 2007

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