The US – Korea free trade agreement appears to be headed for a legislative showdown as members of the House Ways and Means Committee and the Senate Finance Committee approved different versions of the agreement on Thursday. The legislative sticking point remains the Trade Adjustment Assistance (TAA) program, which the Senate Committee included, but which was omitted by the House committee. These decisions, it should be noted, are only mock mark-ups – since President Obama has yet to submit the agreement to Congress.
The upshot of this legislative action is that the parties have indicated that they cannot initially agree on an agreement which the President has not even submitted for approval yet – an agreement, incidentally, which was signed 4 years ago.
The contrast with Europe couldn’t be clearer. The EU- South Korea free trade agreement went into effect yesterday – allowing European manufacturers to sell their goods in Korea without Korean tariffs (which are considerably higher than American ones) while American goods are priced out of the market.
President Obama has repeatedly stated the goal of doubling US exports and reviving the American manufacturing sector. These are both admirable goals, and essential for economic recovery. But delaying the trade agreements is perversely contrary to these goals. Consider but one example: Boeing, one of America’s largest manufacturers and America’s largest exporter, will, as of yesterday, have to sell its aircraft in South Korea at a substantial tariff-induced price disadvantage compared to its largest competitor, Airbus, which, being a French company, will face no such barriers. Indeed, European exporters are already moving to take advantage of these changes- Volkswagen, for example, is already expanding its dealership network in Korea to take advantage of the new lower prices it can offer. Ford ought to have the same opportunity.
Senator Orrin Hatch (R-UT) stated on Thursday that "I hope we can find a better path forward and the president will now act quickly and submit these agreements for congressional consideration, without including the TAA poison pill." This gets to the core of the issue: this agreement should be implemented at ratified, so that American business can start selling goods and creating jobs, before they lose any more market share. Side issues, such as the TAA, should, at least for now, be put where they belong – aside.