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“This agreement is an important step toward a global rule-based trade system…”
Who said this? Nope, this is not the Chamber of Commerce endorsing the Korea-U.S. FTA (KORUS), it is the UAW, representing American auto workers. Congressman Sander Levin, chair of the House Ways and Means Committee and a Democrat from Michigan, used the same words in welcoming the supplementary agreement reached on Friday between U.S. and South Korean negotiators. Those are both good signs that the FTA will be approved and implemented sometime next year, some four years after the original agreement was signed by Presidents Bush and Roh. KORUS is the most significant bilateral trade agreement the United States has concluded since the North American FTA with Mexico and Canada, but it is still small relative to the size of the U.S. economy. The estimated increase in U.S. exports of $10-11 billion from the agreement compares to total U.S. exports of goods and services in 2009 of $1.6 trillion.
The big question is whether movement on KORUS can help to unblock U.S. trade policy in other areas. Most important would be conclusion of the Doha Round of trade negotiations at the World Trade Organization. Those negotiations were launched almost a decade ago and have been mostly stagnant since ministerial-level negotiations broke down in the summer of 2008. Many analysts and policymakers see 2011 as perhaps the last opportunity to complete the round as there are no elections in key countries scheduled for next year.
Hopefully, Doha progress and/or pressure from its G-20 partners will also push the United States to catch up with other rich countries in providing duty-free, quota-free access for the poorest countries. These are also areas where the White House should be able to work with the new Republican majority in the House. But the congressional Republicans, along with the White House, also need to show Americans that they recognize their concerns about trade and are working to address them. A first step in that direction would be to ensure that the expansion of Trade Adjustment Assistance that was included in last year’s stimulus bill does not expire at the end of the year.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.