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KORUS FTA ‘Unfair’: Ron Kirk

Ron Kirk, President Obama’s pick for US trade representative, said the Korea-US FTA, in its current form, is unfair and will need to be changed:

Ron Kirk, President Barack Obama’s pick for U.S. trade representative, pledged to alter a pending accord with South Korea, saying it “isn’t fair.”

The free-trade agreement negotiated by the Bush administration “isn’t acceptable,” and will have to be changed, Kirk told the Senate Finance Committee at his confirmation hearing today.

Uh oh.

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  • Wedge

    Holy Smoot-Hawley, Batman!

  • http://www.sperwerslog.com Sperwer

    Bravo!

  • Bipolar Mindscrew

    What will our protest zombies do next? I think the Mad Cow is exhausted, and movie quotas won’t generate much sympathy, but I foresee 2 middle school girls making a comeback as a rallying point against the oppressive Yankee Empire.

  • http://rjkoehler.com Robert Koehler

    Well, I’d say there’s a lot of potential ammo if the US demands the deal be renegotiated.

  • http://www.wmga.net captbbq

    For a good 30 seconds, I laughed a good hearty laugh of vindication. I’ve said from the time the Democrats took control of congress that the Korean-American FTA was invalid.

    These trade agreements are not meant to serve the nation as a whole but the industries that funded the candidates. Obama is not going to support a bill that helps out Bush’s or other Republicans campaign contributors, unless they are the same as his, which only a few are.

    Instead the new one will have to support the campaign contributors of the democratic party, in this case they will have to support the auto unions vicariously through guaranteeing market share for US automakers.

  • http://www.jdlink.co.kr Linkd

    Bollocks. All free trade deals are “good”. Every last one of them. At least, in theory.

    Each side goes in with a list created through exhaustive economic research. One side figures that under “full” free trade between the two sides, it would save $X mil on the price of bicycles and lose Y jobs in its domestic bicycle industry, and so on and so on, down a HUGE spreadsheet. The other side has a similar list. If it opens its wine market fully, it will save $A mil on the price of wine, and lose B jobs in its own wine industry.

    They also have a list containing their best guesses about each others’ lists. That gives a lot of room to negotiate: “If you won’t open wine fully, I won’t open bicycles fully” etc. It’s like the sliders on a studio soundboard going up and down, trying to get the right sound.

    A fault of participants can be getting hung up on the idea of equal gains, which is an unfortunate trap. Is a deal that gives the other side $10 in gains bad if you only get $1 in gains? The answer is a counterintuitive and emphatic NO. You got $1 in gains, and you are therefore better off than you were before, so you should do the deal.

    Furthermore, even if you unilaterally open up your economy to unrestricted imports, without getting any concessions from the other side, you STILL gain, because your consumers are paying less.

    The money part is easy. If it were only about money trade deals could be wrapped up quickly. It’s the jobs issue that makes it sticky. Another thing that makes it sticky is having a massive global economic crisis change all the numbers on you between the negotiation and the ratification.

    I haven’t looked at the KorUS FTA, but my assumption from this reading is thusly: the US probably cut a deal that probably gave more benefit to industries (the article mentions banking and insurance) where America seemed to have clear advantage, while allowing Korea to protect its manufacturing jobs – not a big US concern because the US had no unemployment and a booming economy.

    Now, of course, the US financial industry has little hope of major international forays, and the US desperately wants to reestablish some manufacturing exports. And now that the US gov’t is going to end up as the sole owner of the auto industry, I’m sure they’d like to have some customers for the cars.

    Every trade deal is a net gain for a country’s consumers. But the rebalancing can hit a certain segment of the country’s workers. Korea pays the highest price in the world for rice in order to maintain a lifeline to fewer than 1 million farm families. Korea would gain on net from the lower prices every Korean would pay for rice by opening its market. It’s a choice countries must make for themselves. The choice doesn’t change the fact that every trade liberalization is a gain for a country’s consumers. The US should just SIGN, implement, get this one in place, and then get to work on another one – not go back to drawing board. It would be such a waste. GM jobs? Gimme a f**king break.

  • iwshim

    Get over it. Nothing is 100% ‘free’ and nothing is ‘fair’.

    You have a deal that is more beneficial than situation that exists now. The only thing this deal means is that the American consumer has more freedom to choose than the Korean consumer.

    Why are people (however few they are) against the freedom that this deal brings to the American consumer?

  • cm

    Great! This is going to save GM, Chrysler and Ford! All their problems solved. Great day for the American Big three!

  • http://yeomso.blogspot.com/ The Goat

    Nobody is actually surprised about this, right?

  • Mizar5

    “Nobody is actually surprised about this, right?”

    Actually it represents a 360 degree turn in the neoliberal politics of the recent past administrations and a significant paradigm shift if there is any substance to it.

  • gbevers

    Why is Korea trying to force an “unequal treaty” on the US?

  • http://www.xanga.com/wangkon936 WangKon936

    gbevers,

    Do you know anything about the FTA?

  • http://www.wmga.net captbbq

    Linkd:

    What you say sounds great. And I agree with a lot of things you wrote. Free trade, no matter what the motive is generally great for the economy. No disagreements there. I’m sure the guys are all about spreadsheets with hypothetical job loss estimates vs. jobs created estimates and busily balance everything out with their counterparts (through I would stress that in weighing whether an industry is helped or hindered by any one concession, it is weighted in no small part by whether that industry supported the current politician who supported the negotiators)

    All up until the part to where you base your augment on the fact that all this is done because it benefits the consumer. Surely it does, but how is this any benefit for the politician? Benefiting the consumer is not a politicians bread and butter, satisfying ones campaign contributors is. What makes you assume in any way they are motivated by the urge to help out the consumers? The motive just isn’t there, and one doesn’t climb to the top of the political shit slinging match without having their motives straght. Call me cynical, I don’t mind. I won’t call you naive, but I will say your model is a bit too idealistic to be reality.

    Then there the little problem with the fact that despite everything you wrote, my model not only explains what is going on, but went so far as to predict it before hand. That is to say sure, you are right in that it is better if the US signed and just implemented it already (I agree wholeheartedly). So why don’t they? Riddle me that.

  • gbevers

    Wangkon (#12) wrote:

    Do you know anything about the FTA?

    Do I have have to know anything about it to suggest it is an “unequal treaty”? Afterall, I am living in Korea.

  • Charles Tilly

    gbevers inanely asks:

    “Why is Korea trying to force an “unequal treaty” on the US?”

    I don’t suppose that it’s to late in gbevers’ cognitive development to introduce him to the concept of “historical context”. In regard to the unequal treaties, those were pursued by rapacious colonial powers cynically exploiting the internal weaknesses of another state. Such weak states really had no choice but to accept them or risk military ripostes. In the case of the KORUS FTA, the circumstance is such that it is two essentially sovereign nations coming to together mutually, and of their own accord to hammer out a deal. Now, the deal may be unfair and lopsided for one side and hence “unequal” but that doesn’t by implication mean that the current deal is a la the unequal treaties during the era of late imperialism. One side or the other has the opportunity to back out without having to worry about troops washing ashore.

  • http://www.xanga.com/wangkon936 WangKon936

    Negativity about Korea appears to be a knee jerk reaction for gbevers. He essentially doesn’t need specific data to have (or support) the negativity.

    If this is his natural starting point, this severely undermines his credibility in the other issues he advocates.

  • http://www.xanga.com/wangkon936 WangKon936

    Well, yeah. And I guess water is wet too.

  • http://www.jdlink.co.kr Linkd

    You are right. I could have sorted my pronouns better, but basically I was taking the point of view of national economies, not politicians. As in: the citizens of our country now spend $100mil on bicycles, buy 1 million bikes per year and 100,000 people are employed by the industry. If we open up and import your bikes, the prices will drop and our citizens will be paying $80 per bike instead of $100, but people will be buying 120,000 per year instead of 100,000, but half our bike companies will go out of business, costing 50,000 jobs…so…(play with spreadsheet), we have a net gain of blah blah dollars.

    It’s enough to make your head explode. Politicians don’t do this, trained negotiators do. And yes, they do it for the benefit their own home country’s consumers.

    Recall my studio sound board analogy – those things have a thousand sliders that go up and down, each an individual bargaining chip. What the politicians DO do is to tell their negotiating team THAT slider right there, don’t fuck with it (or else make sure it ends up HERE when the deal is done). And that slider represents rice for Korea, or beef for America. And so of course those sliders get all the attention. But that’s really as far as politicians get into it. Negotiators hate those sliders.

    It’s definitely an interplay between various parties. Try as we might here and as we always will, none of us can get the whole world into a single blog post, so I’ll close with this reminder: the ONLY reason to negotiate is if you have something to gain. If America had nothing to gain by an FTA with Korea, then it wouldn’t even have bothered to try. The very act of even getting started is an admission to the other side that they can make you better off than you are now.

  • http://www.wmga.net captbbq

    Linkd:

    Here is a list of how much people and PACs belonging to various organization have contributed and in what magnitude to US political parties. You might want to notice the Saddam Husein voter turnout type ratio in which the United Auto Workers Union (ranked 16th in overall contributions) contributes to the Democratic party:

    http://www.opensecrets.org/orgs/list.php?order=A

    I’m not one to mistakenly link correlation to causation, but when I see a number like that, and then watch the newly elected Democratic administrations trade representative nominee go “whoa, hold up, what about our auto workers” I kind can’t help but be compelled to put two and two together.

    You are a smart guy Linkd, I respect you, and if you were American and I could directly vote for the American Federal Trade Representative, I’d vote for YOU, and I’m not just being condescending asshole, though I’m sure may come across as one, at the same time I really mean it, because YOU would go in and say “bollocks” to all this quid-pro-quo political BS, do the right thing and look out for the guy that matters, the consumer. Bravo. Maybe then I could sleep well at night, or would have had you come along in your shiny armour and saved the day before I stopped caring.

  • http://www.jdlink.co.kr Linkd

    Forgot this part

    What makes you assume in any way they are motivated by the urge to help out the consumers?

    1)because consumers vote.
    2)because consumers are also earners, and opening up markets means creating jobs. People who have gotten a better job in the past 4 years tend to vote for incumbents.

  • http://www.jdlink.co.kr Linkd

    -blush-

  • gbevers

    Charles Tilly (#15) wrote:

    I don’t suppose that it’s to late in gbevers’ cognitive development to introduce him to the concept of “historical context”. In regard to the unequal treaties, those were pursued by rapacious colonial powers cynically exploiting the internal weaknesses of another state. Such weak states really had no choice but to accept them or risk military ripostes.

    Last year, Koreans were claiming that the beef agreement between the United States and Korea was an unequal treaty designed to give Koreans “mad cow” disease.

  • tinyflowers

    gbevers, you just equated yourself with mad cow protesters.

  • Charles Tilly

    “Last year, Koreans were claiming that the beef agreement between the United States and Korea was an unequal treaty designed to give Koreans ‘mad cow’ disease.”

    As “tinyflowers” astutely observes, gbevers is indeed taking part in the same sort of tomfoolery of the beef protesters last summer. Whatever legitimate gripes the beef protesters may have had, the notion that the US was unilaterally imposing an “unequal treaty” on the South Korean nation is NOT one of them.

    To reiterate again, with respects to the KORUS FTA, both sides entered into negotiations and agreed to an accord out of the their own volition. No guns or the threat of invading troops serving as the mechanism of enforcement here gbevers. Whatever tiffs or spats that are occurring or may occur, it is between two sovereign states doing it in a peaceful, non-coercive, non-aggressive manner.

    In short, the FTA apple falls pretty far from that of the unequal treaty tree.

  • cm

    I saw the news today, the opposition to the free trade with the US, in Korea, is growing. The rejection by American politicians have renewed the strengths of the Korean opposition party, and even the people in the Grand National Party are questioning Lee Myung Bak’s insistence on signing this deal. The far right, Lee Hoi Chang’s party is also questioning Lee’s wisdom in trying to stick with this deal. The farmers who are set to lose the most out of this deal are very happy. I think everyone should just rip up the paper agreement and just forget about it.

  • Charles Tilly

    RIP the Washington Consensus.

  • http://www.xanga.com/wangkon936 WangKon936

    What Washington Consensus? Never existed… although Obama gave it the good ole college try.

  • Charles Tilly

    What Washington Consensus? Do the words World Bank, International Monetary Fund, United States Treasury Department, Alan Rubin, Lawrence Summers, Bob Rubin, Asian Financial Crisis, Thomas Friedman, or World Trade Organizations dust away any cobwebs?

    Sure it existed and now its back has been broken on the rocks of America’s subprime initiated financial crisis. Right or wrongly the US for years lectured other countries on how to run their economies a certain way and now they’re doing things in direct contravention.

    Hey, it had good run and now it’s spent. But cheer up, I’m sure some other enterprising smart aleck will come a generation from now and successfully attempt to revive and implement the same sort of ideas. It occurred a generation after the Depression and the New Deal, I don’t see why it won’t or couldn’t happen again.

  • http://www.xanga.com/wangkon936 WangKon936

    CT,

    The Great Depression was a long time ago… and the insitutions that combated the Asian Financial Crisis were, by and large, not political but in fact bureaucratic institutions. The IMF and World Bank are post-WWII institutions, where the U.S. had the moral and political authority (and will) to build them.

    And World War II was a long time ago too…

    I think Watergate, Vietnam, Iraq War II, the Regan Revolution, Bill Clinton scandals, etc. over the past 35 years have done much to create fissures in the distant and greying dream once called bi-partisanship.

  • Gillian

    Personally, I am against a USKOR FTA. Not because I am against trade agreements, but because Korea will just use it as another excuse to play the victim card. I would rather Korea make agreements with other countries first, learn the rules to the game, vent their victim’s outrage on someone else for a while, then, and only then, should the US negotiate an FTA with Korea.

    Korea and the EU are in negotiations right now. I feel that is a great place for Korea to start. Let them see how the EU negotiates trade agreements, learn the rules of objectivity, then talk to the Yanks.

  • dry

    #30, Can’t get emo in business over trivial details mate. In the end, it’s just another small bartering tactic and everybody does it; victim card wasn’t actually used by the Koreans this time around; too much to gain already at stake. In fact, I believe the Americans are using it to attempt to get it changed.

    A barterer doesn’t come in and haggle for prices by telling a sod story, they dress like a sod and cut deals with the impression that there is a sod story to be told. Thing about the Yanks was that they had two barterers that wanted different things…a surprisingly sloppy moves from the nation who were the masters at this.

  • http://www.xanga.com/wangkon936 WangKon936

    What saddens me is that this FTA thing was fully negotiated by the respective trade departments of both countries and attempted to be derailed by the respective political organs of each country. Korea has survived the political challenges, namely the beef crisis and the whining of small regional farmers. The government suffered approval ratings in the 20 percent range, but it got through it. Now the bottom feeders of American industry, the crappy auto industry, is the main obstacle to this and it looks increasingly like they are gonna get what they want.

    The excuse? We can’t sell our cars in Korea… boo hoo! Well, they are trying to give them away in the U.S. through their GMAC credit division at a $2k loss and they still can’t sell enough of their crappy cars, what makes them think reducing tariffs will help?

  • SomeguyinKorea

    “…but because Korea will just use it as another excuse to play the victim card.”

    As if the US doesn’t do the same thing.

  • SomeguyinKorea

    “The excuse? We can’t sell our cars in Korea… boo hoo! Well, they are trying to give them away in the U.S. through their GMAC credit division at a $2k loss and they still can’t sell enough of their crappy cars, what makes them think reducing tariffs will help?”

    They couldn’t even sell their cars 3 years ago, so they were offering employee rebates to customers. A Chrysler Sebring listed at 24 000$ could be had for 13 to 16000$ (they are ridiculously expensive in Korea, BTW).

  • DLBarch

    Good riddance.

    DLB

  • Charles Tilly

    WongKon936:

    You’re missing the entire point of what I’m addressing here. When I’m talking about the end of the Washington Consensus, I’m talking about a set of political-economic assumptions that privileges democratic, open free markets to the level of unassailable shibboleths. From the major institutions I mentioned, this idea was indeed alive and well and did EXIST. I really suggest you type in WASHINGTON CONSENSUS in Google search to find out more what I’m talking about.

    Furthermore, to try and categorize the New Deal alphabet soup as “politically” motivated institutions and say that the post-WWII Bretton Woods institutions were “bureaucratic” simply doesn’t wash in any meaningful way. One, both the Bretton Woods institutions and the New Deal institutions come from the same intellectual milieu. In fact it was John Maynard Keynes who was in many ways the intellectual guiding light of the Bretton Woods infrastructure as well as the domestic programs during the 1930′s. Simply read the coverage over the stimulus bill here in the US and you’ll read commentators using “Keynesianism” and a “new New Deal” in the same breath.

    Second, to say that the IMF and World Bank aren’t political is, with all due respect, daft. If they’re not political then please tell me why individuals such as Joe Stiglitz or Kabnur-the head of World Banks World Development Report- can be jettisoned from their sinecures for saying things that contradict IMF, World Bank orthodoxy.

  • http://www.xanga.com/wangkon936 WangKon936

    Well, I misunderstood the term Washington Consensus. Applied a more recent Washington problem to the term.

  • Charles Tilly

    Hey, that’s cool WanKon936. Happens to everybody. Look forward to the next throw down.

  • http://www.tomcoyner.com Tom Coyner

    I think most of us agree that overall free trade is a good thing, but there is never “equal” or even “fair” trade in the eyes of all those who are affected by it.

    Consequently,for the past two plus years I have been trying not to argue the merits or demerits but the likelihood of the KOR-US FTA becoming a reality in the then projected time frames.

    Unfortunately (and I mean that sincerely), I have been right more often than not in saying the chances of that FTA happening in the relatively near future are small.

    Now, with a Democrat-dominated US Government in the face of this economic crisis, the environment does not argue well for the KOR-US FTA happening this year – at least not in its present form.

    The ratification process on both sides has taken too much time, during which significant political and economic developments have transpired to the point that the FTA in its totality has become somewhat out of date.

    So, ultimately, it is likely there will have to be re-negotiations, no matter what politicians and diplomats may today proclaim to the contrary.

    Either there is an FTA that is compelling enough for both governments and their legislatures to get behind in a reasonably quick manner, or the FTA is simply not going to happen.

    Let’s keep our fingers crossed that it does.

  • http://kwillets.typepad.com/kwillets/ KWillets

    With the GM bailout, will Korea have to apply anti-dumping provisions?

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