White House-Korea Trade Deal Garners Support and Stokes Concerns

by Kelly Chernenkoff and Wendell Goler

Citing President Obama's "courage" for walking away from a trade deal with South Korea three weeks ago that didn't meet his standards, the White House announced Friday that Washington and Seoul have finally come to an agreement.

Late in the day, Mr. Obama touted the deal, negotiations for which had generated stomach-churning among American automakers and workers alike.

"Last month in Seoul I directed our negotiators to achieve the best deal for American workers and companies, and this agreement meets that test," the president said in a statement.

The last sticking point involved opening Korea's auto market to U.S. companies. The deal is expected to increase U.S. exports to Korea from a paltry 6,000 cars a year, to 25,000 thousand for each of the "Big Three" auto companies over the next five years.

However, the scales still won't be balanced. South Korea sells more than 400,000 cars a year in the U.S.

Still, Mr. Obama said, "American manufacturers of cars and trucks will gain more access to the Korean market and a level playing field to take advantage of that access."

The increase in U.S. exports, officials say, will generate $10 to $11 billion in additional revenue for General Motors, Ford and Chrysler and support tens of thousands of American jobs.

The deal's announcement drew instant criticism from liberal group Public Citizen, which says it would let Mr. Obama "take ownership of another Bush NAFTA-style trade deal that would simultaneously favor their job offshoring agenda and put [his] re-election in peril."

The group says past U.S. free trade agreements have barely increased export growth and fears the same with the Korean agreement.

Senior administration officials say the agreement cuts Korean tariffs on U.S. cars in half and phases them out over five years. U.S. tariffs on Korean cars would stay in place until the final year, giving U.S. automakers an advantage in years 2 to 5. Korean tariffs are now 50% higher than those levied by the U.S.

Republican Congressman Dave Camp of Michigan says he has been working with the administration on the deal and was pleased upon its conclusion. "Not only will this agreement ensure that job-creating U.S. exports are competitive in this vital market, it will - along with other ongoing trade talks in the region - provide us with a critical counterbalance to China's growing influence," Camp said in a statement.

Aides say U.S. auto executives were kept abreast of the talks and they predicted a positive response from Ford and probably General Motors, though perhaps not Chrysler. Late Friday, Ford delivered. "These new provisions provide Ford greater confidence that we will be able to better serve our Korean customers," Alan Mulally, CEO of Ford Motor Company said. "We deeply appreciate the tireless efforts of the Obama Administration and Congress to improve this agreement and open the Korean auto market."

The administration is already working lawmakers to ratify the treaty, making a series of calls this morning. The response so far, they say, has been very positive."[W]e think we've put together a package that business, labor, Democrats and Republicans can feel comfortable in supporting," said one administration official.

Mr. Obama and his team are anxious for immediate ratification. On that front, they'll have an ally in the U.S. Chamber of Commerce. The Obama White House and the Chamber have had something of an inconsistent relationship, but on this front, President and CEO Thomas J. Donohue is steadfast. "The administration has done its part," Donohue said Friday. "Now it's time for the new Congress to make passage of [the deal] a top priority in January. We will do everything in our power to round up the votes."

At the G20 summit in Seoul last month, officials had said auto and beef sales were the main sticking points, but they made clear resolution of the car dispute would be enough to finalize the revision of a 2007 trade agreement negotiated by the Bush administration Democrats felt was inadequate.

The ban on U.S. exports of cattle more than 30 months old remains because of South Korea's concerns about mad cow disease. Democratic Senator Max Baucus, who's been pressing for more access for American ranchers to the Korean market, was not pleased. "I am deeply disappointed that [Friday's] deal fails to address Korea's significant barriers to American beef exports, which President Obama identified this June as one of the critical outstanding issues that must be resolved before moving this free trade agreement forward," he said.

However, both administration officials and Baucus contend the issue will not be abandoned. "I am deeply committed to righting this wrong and will work with the Administration in the period ahead to ensure that America's ranchers and farmers are not left behind. I will reserve judgment on the free trade agreement until then," the Senator added."

Final negotiations for the trade deal were conducted in Columbia, Maryland and concluded Friday morning. Officials said talks in some cases were "around the clock."