Korean Trade Pact is Good for Lansing Area - Lansing State Journal

Swift action is needed to boost economy, jobs

August 19, 2010
By Tim Daman

President Obama's goal of doubling U.S. exports and creating 2 million new American jobs in the next five years sounded great when announced earlier this year - but the initiative has yet to get off the ground. In fact, trade figures announced last week show that the already huge U.S. trade deficit is at its highest point in 21 months - and is now just shy of $50 billion.

Rather than growing our export markets and creating new opportunities for U.S. businesses and farmers to sell their goods and services in foreign countries, we seem to be stuck on the sidelines.
One bright spot on the horizon is President Obama's recent pledge to work through the remaining issues that have stalled approval of the U.S.-Korea Free Trade Agreement (KORUS). This, of course, means tackling the auto issue - which is of primary concern to Michigan.
 
An equitable FTA with Korea would increase opportunities for GM cars produced in Greater Lansing, elsewhere in Michigan and around the U.S., to be bought by Korean consumers - while creating a more level playing field for American automaker vs. the less-expensive Korean imports that are taking domestic market share.
 
The currently negotiated KORUS FTA would immediately eliminate South Korea's eight percent tariff on U.S. passenger vehicle and auto parts; eliminate discriminatory aspects of its system for taxing cars based on "engine displacement" that U.S. industry has identified as a priority.
 
By U.S. International Trade Commission estimates, the current agreement would increase U.S. auto exports to Korea by 46 percent to 59 percent. Some will counter that other obstacles to free trade will still hinder U.S. auto sales.
 
Whether that's the case or not, from a Michigan perspective, if more can be done to help level-the-playing field for U.S. automakers and workers, by all means, U.S. negotiators should work with their Korean counterparts to forge an agreement that can gain wide support from business and labor.
 
A recent U.S. Chamber of Commerce study found that America could suffer a net loss of more than 345,000 jobs and $20.3 billion in lost export sales if we fail to implement the KORUS FTA while the European Union and Canada move forward to implement their pending FTAs with Korea.
 
The EU trade agreement with Korea has already been negotiated - and could give significant advantages in the Korean market to many European service and manufacturing companies at the expense of American companies. This includes automakers such as VW, Fiat and BMW.
 
With 95 percent of the world's consumers living outside U.S. borders, it should be clear to U.S. policy-makers that a key component of any policy designed to return America to strong economic growth and job creation is to forge the trade agreements that will maximize our potential to sell our products abroad.
 
The KORUS FTA will benefit Michigan, and we urge a fair and successful conclusion to the ongoing negotiation, and quick approval by Congress.
 
* Tim Daman is president of the Lansing Regional Chamber of Commerce.