U.S. President Barack Obama Friday approved the extended phaseout of tariffs on autos hammered out by trade negotiators, removing the hurdle for the ratification of a pending free trade deal with South Korea.
In a statement, Obama described the deal U.S. Trade Representative Ron Kirk made with South Korean Trade Minister Kim Jong-hoon early in the day as "an integral part of my Administration's efforts to open foreign markets to U.S. goods and services, create jobs for American workers, farmers and businesses, and achieve our goal of doubling of U.S. exports over five years."
Obama's statement follows a similar one issued by South Korean President Lee Myung-bak earlier in the day to endorse the deal and call on the
legislatures of both countries to approve it as soon as possible.
The Korea FTA was signed in 2007 under the previous Bush administration but has since been in a lull over U.S. demands for wider access to the South Korean auto and beef markets.
Obama pledged in Seoul last month to complete the talks for the deal's ratification within weeks, although he missed his earlier, self-imposed deadline of mid-November.
The Korea FTA is seen as a barometer for Obama's commitment to free trade as he seeks to double exports within five years as a means of creating jobs.
Obama praised the deal as one that "deepens the strong alliance" between South Korea and the U.S., and "reinforces American leadership in the Asia Pacific," and called on Congress to "get this done and to ensure that America competes aggressively for the jobs and markets of the 21st century."
Obama has said he wanted to present the deal to Congress early next year.
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 this year's midterm elections.
Many congressional Democrats, backed by trade unions, oppose free trade due to fears over possible job cuts amid the world's biggest economy suffering from near two digit unemployment in the worst recession in decades. Failure to present the deal to Congress by early next year would likely doom it, as Republicans vow to focus on domestic issues, including taxes and a reversal of Obama's health care reform policy, ahead of the presidential election in 2012.
Obama said the deal with South Korea, the seventh-biggest trading partner for the U.S., will "increase annual exports of American goods by up to $11 billion and support at least 70,000 American jobs."
"American manufacturers of cars and trucks will gain more access to the Korean market and a level playing field to take advantage of that access," Obama said. "We are strengthening our ability to create and defend manufacturing jobs in the United States, increasing exports of agricultural products for American farmers and ranchers, and opening Korea's services market to American companies."
Autos and beef had presented the major hurdles to the deal, but focus had been on autos during the intensive four-day negotiations between Kim and Kirk at a hotel in Columbia, Maryland.
South Korea has refused to discuss possible shipments of beef from cattle older than 30 months. Weeks of street rallies almost paralyzed the Lee Myung-bak administration in early 2008 after Lee's decision to resume U.S. beef imports.
The U.S. beef industry recognized the sensitivity of the issue and did not want to jeopardize the rapid increase in beef exports to South Korea since 2008, when Seoul lifted the ban on shipments imposed after the outbreak of mad cow diseases in the U.S.
Focus was put on to what extent Seoul will ease safety and environmental standards and delay the elimination of the 2.5 percent tariff on most autos and auto parts, as well as a phase-out of the 25 percent tariff on light trucks.
Neither Kim nor Kirk discussed the substance of the deal, but the USTR said on its Web site later in the day that Seoul has accepted the U.S.
proposal to maintain the 2.5 percent tariff for five years, although the current deal calls for the elimination of the tariff immediately or within three years depending on engine capacities."At the same time, Korea will
immediately cut its tariff on U.S. auto imports in half (from 8 percent to 4 percent), and fully eliminate that tariff in the fifth year," the USTR said.
Seoul also allowed Washington to "maintain its 25 percent truck tariff until the eighth year and then phase it out by the tenth year."
South Korea, in the meantime, will eliminate its 10 percent tariff on U.S. trucks immediately, as was agreed upon in 2007.
The deal also allows each U.S. automaker to export 25,000 cars, about four times the number allowed in the 2007 agreement, to South Korea annually "provided they meet U.S. federal safety standards."
The U.S. exported 5,878 automobiles to South Korea last year, while South Korean auto shipments to the U.S. totaled 476,833, according to the United Auto Workers.
South Korea had insisted on U.S. concessions in agriculture in return for the concessions it made on the auto trade.
Kim said earlier in the day that "we've also produced a substantial outcome on our demands on agriculture and some other issues," without
elaborating.
Alan Mulally, CEO of Ford Motor Company, supported the deal.
"As a global company committed to free trade, Ford Motor Company applauds the outlines of the revised U.S.-Korea Free Trade Agreement that were
announced today," Mulally said in a statement. "These new provisions provide Ford greater confidence that we will be able to better serve our Korean customers. We deeply appreciate the tireless efforts of the Obama Administration and Congress to improve this agreement, and open the Korean auto market."