Obama Signs Trade Agreement with South Korea

It had to happen eventually. By signing a trade agreement with South Korea, President Obama did something I generally support. However, the devil is in the details, so please consider Obama hails South Korea trade as victory for US workers

President Barack Obama on Saturday praised a newly sealed trade deal with South Korea as a landmark agreement that promises to boost the domestic auto industry and support tens of thousands of American jobs.

The pact, which requires congressional approval, would be the largest since the North American Free Trade Agreement with Canada and Mexico in 1994. Obama said the South Korean deal would support at least 70,000 American jobs -- welcome news with the latest unemployment figures showing nearly stagnant job growth. The president said that jobs report showed more needed to be done.

Representatives from both countries broke through a stalemate Friday morning on issues related to the automobile industry.

South Korea would allow the U.S. to lift a 2.5 percent tariff on Korean cars in five years, instead of cutting the tariff right away. Each U.S. automaker could export 25,000 cars to South Korea as long as they met U.S. safety standards; disputes over safety standards had effectively stood as a barrier to U.S. auto exports into Korea. A U.S. tariff on Korean trucks would be phased out and South Korea would eliminate its tariff on U.S. trucks immediately.

South Korean President Lee Myung-bak praised the deal as bringing huge economic benefits to both countries and further boosting the two nations' alliance.

"The accord is significant because it lays the groundwork for a 'win-win' relationship by reflecting the national interests of Korea and the United States in a balanced manner," Lee said in a statement posted on the presidential website.

The overall agreement would eliminate tariffs on more than 95 percent of industrial and consumer goods within five years. The U.S. International Trade Commission estimated that would increase exports of U.S. goods by at least $10 billion. The deal would also open up South Korea's vast $560 billion services markets to U.S. companies.

My one complaint is the deal phases in over 5 years. It should be immediate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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