Monday, 23 August 2010 00:00
An editorial on trade in Automotive News, the de facto voice of our industry, got me thinking recently. The piece, published last week, is titled, "It's Time to be Firm with Korea on Trade Pact."
In it, the author or authors suggest that the South Korea - U.S. free trade agreement (KORUS FTA) needs to be renegotiated, specifically the sections of the agreement related to the auto sector.
On this subject, I have to respectfully disagree.
The agreement, as it was drafted and accepted by both countries three years ago, is fair and well-structured. Is it perfect in every way? No. But it was negotiated in good faith, and it will absolutely boost the economies of both the U.S. and South Korea. Re-opening negotiations on this extremely detailed and delicate pact would be like cracking an egg and then trying to put it back together again. Impossible.
Our Congress has refused to ratify the agreement for 36 months now, not because of real concerns over its substance, but as a favor to unions and other entities, whose knee-jerk response to any free trade proposal is "no way." Remember, this is an election year.
Congress wants to throw its weight around and force South Korea to accept some unreasonable demands. Unfortunately for us, Congress no longer has that sort of influence. The South Koreans have moved on since drafting the FTA with the U.S. They have established lucrative trade agreements with the European Union, Canada has done the same with Columbia, and Japan has sealed a $211.4 billion deal with the Association of Southeast Asian Nations.
With these trade pacts, nations are not only helping out their economies, they are also forming positive relationships with other countries that will ultimately contribute to more secure interactions on all levels. In short, countries that trade together don't generally point weapons at one another. Trade is as much a tool of diplomacy as it is a tool of economics. And the world isn't waiting for the U.S. to get with the program.
The U.S. is being left out in the cold on trade. By refusing to ratify the KORUS FTA, we are missing out on an agreement that would eliminate tariffs on nearly 95 percent of consumer and industrial product trade and could add up to $30 billion in bilateral trade between our two countries. According to the Chamber of Commerce, U.S. failure to act while other countries form their own trade deals could cost us $40.2 billion in exports and 383,400 American jobs.
Is this the part where we are supposed to thank Congress for looking out for our best interests? I'll pass.
There is an old saying that "a rising tide lifts all ships." The same can be said of the KORUS FTA. It will boost all manufacturers' bottom lines, provide consumers with more choice, and improve the national security of both countries.
Detractors of the agreement need to re-evaluate their position. It is time to look beyond the tired old argument of "us vs. them" and "Detroit vs. everyone else". Those simplistic divisions no longer make sense in the global world in which we live, where 95 percent of consumers live outside the U.S. Embracing the pact means embracing new competition, new opportunities, and new prosperity.
Automotive News may think we need to be firm with South Korea. In reality, business owners like me see that it is long PAST time to be firm with Congress on trade.
Rick DeSilva
AIADA Chairman
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