Despite high unemployment, the Obama administration has been slow to come up with an effective trade policy. It’s seemingly been trying with Colombia, Panama and South Korea, but its lack of success is startling.
The most economically valuable trade agreement America could easily agree upon would be the one with South Korea. Indeed, the details have largely been finished – and have been for some months – but the president has not submitted it to Congress for approval. But if Obama doesn’t hurry, it could be too late to score lucrative trade with South Korea: European lawmakers overwhelmingly approved a free trade agreement with South Korea last week, and it is set to take effect in July of this year.
The European Union expects the agreement to double EU- Korea trade within twenty years. Last year trade between South Korea and the EU reached $92.2 billion. Specifically, the Los Angeles Times reports, the agreement will “eliminate 98.7 percent of customs duties between South Korea and the EU within five years of taking effect and will remove non-tariff barriers across many sectors.” This might not bode well for American industries, especially if European exporters, seeing immediate benefits under the agreement, quickly begin to trade with the Koreans – thus leaving American industries out of the equation.
Obama previously said the trade agreement between South Korea and the United States “will support at least 70,000 American jobs,” and the White House claims tariff reductions alone under the agreement will increase annual American exports to South Korea by $11 billion, making 95 percent of consumer and industrial products duty free within three years. The benefits are clear, but why hasn’t anything been done?
Listening to the Obama administration, one would think the blame lies on the shoulders of Congress. In his State of the Union address, Obama told Congress: "This agreement has unprecedented support from business and labor; Democrats and Republicans, and I ask this Congress to pass it as soon as possible." But members of Congress can’t approve the agreement until it’s before them.
Patrick Christy is a policy analyst at the Foreign Policy Initiative.