Obama Ally Calls Korea-US FTA ‘Unfinished Business’

A former customs affairs director for the U.S. Trade Representative who is likely to serve in the Obama administration calls the Korea-U.S. free trade agreement “unfinished business.”

Jay Eizenstat, now an attorney at Miller & Chevalier, served as senior trade policy adviser to Obama’s transition team.

“The consultations on the free trade agreement between the two countries are expected to resume this summer. Congress and the White House will fine-tune the details of the agreement to come up with more efficient strategies,” he said.

Eizenstat also said the U.S. Trade Representative and the Commerce Department, which are in charge of trade policy, will be more aggressive than under the Bush administration.

The following is excerpts of a Dong-A Ilbo question and answer session with him.

◊ Do you believe the free trade deal with Korea will be ratified this year?

“I think FTAs with Panama and Columbia will be ratified by Congress in the second half of this year. As for the Korea-U.S. FTA, however, the chances of ratification are remote because of tricky issues including the auto industry.”

◊ Do you mean a renegotiation?

“It’s not easy to specify whether it would be renegotiation or amendments within the current framework, but the next administration believes an additional process is necessary.”

◊ If Korea’s National Assembly ratifies the agreement ahead of Congress, do you think it will make congressional support for the deal easier?

“I don’t expect much difference. Rather, it will invite a political debacle if the Korean government tries to take political advantage of it.”

Eizenstat cited U.S. beef and car imports and non-tariff measures as the most contentious issues surrounding the agreement.

◊ Is Congress dissatisfied with all three issues?

“Most politicians in and out of Washington seem to believe the beef issue has more or less been resolved. But Congress believes more negotiations are required for provisions for auto and various non-tariff barriers, the principal axes of the Korea-U.S. FTA.”

◊ Can you be more specific?

“Discrimination by Korean regulatory policy has put American cars at a bigger disadvantage than those from other nations. The prevalent atmosphere in Washington is that the consensus on auto-related measures is unbalanced.”

◊ Some experts say Washington is trying to link the U.S. auto industry’s lack of competitiveness with foreign trade and commerce.

“Of course, (the U.S. auto industry) has several problems in its own system, industrial structure and others. It will go through streamlining and restructuring procedures. The argument on discrimination against American cars is nothing new.”

Eizenstat cited Korea’s car tax based on engine size as an example of Korea’s auto discrimination.

Though he did not directly mention this, U.S. trade hard-liners cite the 700,000 Korean vehicles sold in the U.S. market each year, while the corresponding number for American automakers in Korea is just 5,000.

◊ Compared to the Bush administration, what characteristics will the Obama administration’s trade policy have?

“U.S President-elect Barack Obama will not want to be viewed as protectionist. Consistent support will go to the World Trade Organization and the Doha Development Agenda but focus will be placed on enforcement and litigation of regulations reflecting the demands of U.S. industries (within the World Trade Organization framework). Some complaints can be lodged against regulation clauses on labor and the environment in FTAs with Korea and Columbia.”

“The Obama administration will focus as much on the process as on the negotiation results. Instead of highlighting the achievement of free trade (carrots), it will make efforts to secure equal footing for U.S. industries competing on the global stage.”