Fair Trade Wars, Act I

South Korea is getting jittery about prospects for its long sought Free Trade Agreement with the United States, which is still yet to be approved by both countries, and is now under threat from a potentially protectionist Obama administration.

In the past Obama has criticized the agreement as deeply flawed, but has proven somewhat idiosyncratic about that at other times. South Korean Trade Minister Kim Jong-hoon must not like the trend of things though, as today he took the remarkable step of categorically ruling out any renegotiation of the agreement to placate the incoming administration, despite renegotiation talks being something Obama has insisted on.

It was left to Kim to state the obvious, which isn’t necessarily what the UAW backed Obama administration will want to hear:

“The problems facing the U.S. auto industry are not new ones,” Kim said, adding that U.S. automakers should make efforts to boost their competitiveness.
(Korea Times)

In defending the agreement’s survivability under an Obama administration, ruling party whip Hong Joon-pyo may unfortunately have an overly optimistic notion of how reliable the United States can be in such matters :

“It is highly unlikely for Washington to break off the deal following a change of administration, especially a deal made with Korea, its ally.”
(Yonhap)

The deal already stands to favor the United States by eliminating the heftier South Korean tariffs on US cars, and is estimated by the ITC that it would generate a little under twice the revenue in increased exports from the US, that it would for the ROK.

But, American automakers want the agreement to be revised to mandate market share for their products. In essence, forcing the Republic of Korea to subsidize them, to supplement their already generous subsidies from the USG. That may be many things (including a functional definition for industrial racketeering), but a free trade agreement it is not. Regrettably, it’s also likely a view Obama shares, given that he has criticized expanded trade with South Korea specifically on grounds of its preexisting export volume to the United States.