Obama Hails 'Win-win' U.S.-South Korea Trade Deal

The agreement lifts tariffs on 95% of goods between the countries within five years, in what would be the largest U.S. trade pact since NAFTA.

President Barack Obama said on Dec. 5 that a sweeping U.S.-South Korean free trade agreement that broke through a three-year deadlock was a "win-win" for both countries.

The "landmark" agreement benefits U.S. workers, farmers and ranchers, Obama said, and was also a "win" for South Korea because it will grant the Asian ally "greater access to our markets and make American products more affordable for Korean households and businesses."

Associated tariff reductions are expected to boost annual exports of U.S. goods by up to $11 billion while contributing "significantly" to his goal of doubling U.S. exports over the next five years, Obama said of the agreement that raised hopes of renewed U.S. leadership in Asia.

The agreement lifts tariffs on 95% of goods between the countries within five years, in what would be the largest U.S. trade pact since the North American Free Trade Agreement with Canada and Mexico in 1994.

Under the renegotiated agreement, the United States will be allowed to keep its 2.5% tariff for five years, while South Korea would immediately cut its tariff in half to 4%. Both sides would eliminate tariffs after five years.

U.S. officials said South Korea would also ease car safety and environmental standards that U.S. automakers contend are a thinly disguised way to stifle foreign competitors through arbitrary requirements.

The revised agreement would let each U.S. automaker export 25,000 cars per year that meet only U.S. safety requirements -- four times the current level.

After nearly four days of talks in suburban Washington, negotiators cleared a key hurdle by letting the United States move more slowly on lifting tariffs on South Korean cars after U.S. automakers feared a flood of imports.

The deal still needs ratification by the two countries' legislatures. But the U.S. Chamber of Commerce has already said it supports the measure's passage, vowing to do everything it can to lobby for the necessary votes.

In Seoul, President Lee Myung-Bak said the agreement would bring "huge benefit" to South Korea and provided "a new window of opportunity for our economy to take off again," embracing the free trade deals as a strategy to promote an economy long in the shadow of economic giants Japan and China.

Obama won early support from a labor-backed congressman and the Ford Motor Co., former staunch opponents of the deal.

Once a critic of the deal first negotiated in 2007 under his predecessor George W. Bush, Obama praised what he called "the best deal for America" that would create 70,000 U.S. jobs through new exports -- an estimate disputed by critics. "The agreement we're announcing today includes several important improvements and achieves what I believe trade deals must do -- it's a win-win for both our countries," he said.

Obama had hoped to finish the deal in time for his visit to Seoul last month for the Group of 20 summit, believing the agreement would boost close ally Lee, who is facing down soaring tensions with North Korea. Negotiators failed to reach an agreement in time, largely due to concerns by U.S. automakers worried about the immediate end to tariffs on cars.

Copyright Agence France-Presse, 2010

TAGS: The Economy
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