An Ego-Fueled Treaty

IBD Editorials ^ | December 6, 2010 | Staff

[Kaslin]

Commerce: A side pact has finally put the Korea-U.S. free-trade treaty on track for a vote in Congress. But given how little was changed, and how much the delay cost the economy, why did it take so long?

After nearly four years of inaction in Congress, the biggest market-opening treaty since Nafta is about to send an adrenaline shot through the American economy, adding $11 billion in new business to the $69 billion in annual trade the U.S. does with South Korea, one of Asia's economic giants.

As soon as Congress ratifies the pact, 95% of tariffs on U.S. goods into Korea's growing market will be cut to zero in three years. And like Nafta, the trade will be a job-creating machine, with White House officials estimating 70,000 new jobs. Considering the U.S. experience with other pacts, it will probably be more.

All it took to get those mega-benefits to the U.S., it appears, was a tiny sidecar deal on automobiles, a protectionist carve-out that makes the pact less free but more palatable to President Obama.

Not to be churlish, but that raises questions about why such minimal changes were allowed to hold up a treaty of this importance for the entire economy. Nothing should be held hostage like that.

In the first place, there was no need for the sidecar agreement. The deal's language was left intact, suggesting it was done right by the Bush administration and was never a "bad trade pact," as Obama claimed during the 2008 presidential campaign. Fact is, free-trade treaties are good for the economy, and every president since Herbert Hoover has recognized this. Until now, Obama was the outlier.

[Paladin2]

Zer0 and his handlers/fellow travelers are good at fabricating and implanting economic IEDs.

[G-Man 1]

Are they going to import American cars?

[G-Man 1]

Are they going to import American cars?

[gogogodzilla]

Yes, they are. Or at least, we’ll be able to sell them without the outrageous tariffs.

That said, time will tell if the Koreans want to buy them. Small cars tend to do better in Korea, due to the narrow roads and high gas prices.

[Einigkeit_Recht_Freiheit]

Actually Ford is doing a great job at building cars that people outside the US want. GM is alright as well. If Fiat can turn Chrysler around that is also good news for Detroit.