A Free Trade Agreement with South Korea Would Promote Both Prosperity and Security

President Barack Obama took office with a record of scepticism toward free trade, including several free trade agreements negotiated by the Bush administration. The Democratic Congress was even more hostile to liberalising international commerce, says Doug Bandow, a senior fellow with the Cato Institute.

Now the president has made trade promotion an administration priority. One of the surest strategies to grow the economy and increase higher-paying employment is to expand trade. Thus he has endorsed the free trade agreement with South Korea – with as yet undefined changes. He hopes to have an amended version ready at the next G-20 Summit, scheduled for Seoul in November.

Although the accord is not perfect, it would substantially increase access to the South Korean market.

Both the Republic of Korea and the United States would benefit from increased exports, economic growth and job creation.

The long-term potential is even greater: as South Koreans grow wealthier, they are likely to increase their foreign purchases, and eventual Korean reunification would greatly expand the Korean marketplace for American exporters.

The free trade agreement also offers important geopolitical benefits, says Bandow.

China's rapid economic growth has helped expand Beijing's influence throughout East Asia.

Indeed, there is now more trade between South Korea and China than between South Korea and the United States.

As American military dominance fades, the large and productive U.S. economy offers an important alternative form of regional engagement.

Washington should seek to expand trade throughout the Asia-Pacific – reducing trade barriers with South Korea is an important first step.

The United States should move ahead even if Seoul resists formal renegotiation of the trade pact. Washington can and should push for further liberalisation, but such efforts will be stillborn if the free trade agreement is not soon ratified.

Source: Doug Bandow, A Free Trade Agreement with South Korea Would Promote Both Prosperity and Security, Cato Institute, October 20, 2010.

For text: http://www.cato.org/pub_display.php?pub_id=12490

For more on Trade Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=42

First published by the National Center for Policy Analysis, United States

FMF Policy Bulletin/ 02 November 2010