U.S. President Barack Obama Saturday pledged to complete talks for ratification of a free trade deal with South Korea that would help create jobs amid near two-digit unemployment seen as a key cause of the Democratic Party's midterm election defeat last week.
"Completion of this deal could lead to billions of dollars in increased exports and thousands of American jobs for American workers," Obama told a meeting of chief executives at the Asia Pacific Economic Cooperation forum in Yokohama, Japan, according to a transcript released by the White House.
"So I am committed to seeing this through."
Obama has yet to present the free trade deal with South Korea, signed under the Bush administration in 2007, to Congress for ratification, demanding wider access to the Korean auto and beef markets.
He said Friday that non-tariff barriers on auto trade have served as a bigger obstacle than beef to the conclusion of talks for the deal.
"Beef was not the only issue that was of concern," Obama said at a news conference in Seoul, where he attended a summit of leaders of 20 major economies. "In fact, a larger concern had to do with autos. And the concern is very simple. We have about 400,000 Korean autos in the United States and a few thousand American cars here in Korea."
Obama held summit talks with South Korean President Lee Myung-bak Thursday but failed to strike a deal.
Obama has said since the G-20 summit in Toronto in June that he wanted the talks concluded with Lee during the just-concluded G-20 summit in Seoul as part of his ambitious goal of doubling U.S. exports within five years.
An agreement could have lent momentum to two other pending trade deals, with Panama and Colombia, and Obama's push for a similar deal with Japan, Australia, Malaysia, and several other Asian and Pacific Rim countries, the so-called Trans-Pacific Partnership.
"People are concerned about whether the standards, the non-tariff barriers with respect to autos, is something that is preventing us from
being able to compete with very good products," Obama said at a press conference to wrap up his two-day stay in the South Korean capital, where he attended the G-20 summit.
Obama's remarks contradict media reports that the talks were derailed by the beef issue, which U.S. Trade Representative Ron Kirk presented in the last minutes of the intensive three-day negotiations earlier this week ahead of Obama's meeting with Lee.
South Korea has a firm position not to discuss the U.S. demand for shipments of beef from cattle older than 30 months as it experienced weeks
of street rallies in early 2008 after lifting a ban on U.S. beef imports due to safety concerns.
Seoul suspended shipments of U.S. beef in 2003 after the outbreak of several cases of mad cow disease in the U.S.
Seoul officials said that they are not ready to allow imports of beef from older cattle, although they will consider easing safety and
environmental standards for autos.
Marcus Noland, a senior researcher at the Peterson Institute for International Economics, said Obama's failure to strike a deal "is
potentially a major setback for U.S. trade policy and the world economy more generally."
"In Toronto, Obama and Lee said that they would get KORUS done by Seoul. In Seoul, in front of their 18 most important peers, they didn't. Now it's on to Japan. But why would anyone listen to Obama there? At least in the short-run, his credibility is shot," the scholar said.
Noland said he is curious why U.S. negotiators "sprang on them new demands relating to beef, and while they were ready to deal on cars, they
were not ready for again facing 500,000 protesters in the streets of Seoul and walked out of the negotiations.
"It's hard to believe that Kirk would spring this on his own, which raises the even more disturbing question of whether Obama changed his mind after the election and is retreating to the bunker on trade."
Obama still expressed hope for an early conclusion to the trade talks.
"I think that we can find a sweet spot that works both for Korea and the United States," he said. "I'm not interested in trade agreements just for the sake of trade agreements. I want to make sure that this deal is balanced. And so we're going to keep on working on it. But I'm confident we can get it done."
South Korean Trade Minister Kim Jong-hoon will soon visit Washington to meet with Kirk to conclude negotiations.
Obama repeated his pledge to complete the talks "within weeks, not months."
"We will continue to work toward a U.S.-Korea free trade agreement in the coming weeks -- not just any agreement, but the best agreement to create jobs both in America and Korea," he said. "I think we can get a win-win, but it was important to take the extra time so that I am assured that it is a win for American workers and American companies as well as for Korean workers and Korean companies, because I'm the one who's going to have to go to Congress and sell it."
Many Congressional Democrats disfavor the trade deal for fear of possible job cuts amid the worst recession in decades, although free trade is seen as one of the potential areas of close cooperation between Obama and congressional Republicans, who regained control of the House in the midterm elections amid a prolonged economic slump and near double-digit unemployment.
"I think there's a lot of suspicion that some of these trade deals may not be good for America," he said. "I think this one can be, but I want to make sure that when I present that trade agreement to Congress I am absolutely confident that we've got the kind of deal that is good for both countries."
Proponents of the deal fear any failure by Obama to present the deal to Congress early next year will jeopardize its fate, as Republicans have vowed to reverse Obama's health care reform policy, and focus on taxes and other more urgent domestic issues ahead of the politically sensitive campaign for the presidential election in 2012.
The U.S. exported 5,878 automobiles to South Korea last year. South Korean auto shipments to the U.S. totaled 476,833 last year, according to
figures from the United Auto Workers union.
Beef is not an issue covered by the Korea FTA, but Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, and some other politicians have threatened not to move for the approval of the Korea FTA unless South Korea allows shipments of beef from cattle of all ages. Montana is said to be the biggest source of beef from older cattle.
The U.S. beef industry has called for a cautious approach, fearing a possible backlash in the Korean market, where U.S. beef shipments have grown rapidly since South Korea resumed imports in 2008 after a five-year hiatus.
Independent studies show that the implementation of the FTA with South Korea will create 240,000 jobs in the U.S. and increase annual two-way trade by more than $20 billion, up from $83
billion.
The U.S. goods trade deficit with South Korea was $10.6 billion in 2009, down $2.8 billion from 2008, according to U.S. figures.
South Korea says its trade surplus with the U.S. is far less than those enjoyed by China or Japan, and that the U.S. deficit would be easily
neutralized after factoring in the U.S. surplus with South Korea in finance.
Obama has expressed fears that any delay in the Korea's FTA's ratification will undermine U.S. competitiveness in Korea, the seventh
biggest overseas market for the U.S.
South Korea recently signed an agreement with the European Union for the provisional implementation of a bilateral free trade deal beginning in July.
Seoul also effectuated free trade deals with India and Chile, and is proceeding with similar agreements with China, Japan, the Association of
Southeast Asian Nations, Australia and Canada.