KORUS FTA may get boost from U.S. auto industry restructuring: expert

By Hwang Doo-hyong
WASHINGTON, April 7 (Yonhap) -- A pending free trade deal between South Korea and
the United States will likely get a boost from the ongoing restructuring of the
U.S. auto industry, an expert said here Tuesday.
Jack Pritchard, president of the Korea Economic Institute, was discussing the
proposed restructuring of GM and the possible merger of Chrysler with Italy's
Fiat. The steps are aimed at meeting the demands of the Barack Obama
administration to receive bailout funds.
"We may have an entirely different situation in terms of the U.S. auto industry
in the next 60 or 90 days," Pritchard told a forum in Washington.
Obama has ordered GM, the biggest U.S. automaker, to provide a new restructuring
package within 60 days and told struggling Chrysler to merge with Fiat within 30
days if they hope to get additional government funds. The two automakers are
teetering on the edge of bankruptcy.
"That is astonishing that the administration has done that," Pritchard said of
the president's most recent moves. "The U.S. may be far more receptive to doing
things (now) particularly with the auto section of the FTA. Progress can be
made."
Seoul and Washington signed the free trade agreement, called the KORUS FTA, in
June 2007, but it has yet to be ratified by either legislature. Obama has said
the deal is lopsided, particularly in terms of auto trade. South Korea disputes
U.S. figures, which include hundreds of thousands of autos produced by Hyundai
Motor's plant in Alabama.
Pritchard, however, noted that Obama responded positively to calls by South
Korean President Lee Myung-bak in London last week to ratify the agreement as
soon as possible.
In their summit held on the sidelines of the G-20 economic forum, Lee and Obama
agreed that deal would be beneficial to both countries and committed to working
together to chart a way forward.
A senior aide to Obama said last week, "There was no talk of a schedule" on the
FTA, but "simply an acknowledgment that this was going to take time."
Obama also told Lee that he "understood there were difficulties on both sides on
moving forward, but he said he does want to make progress and our staffs should
discuss how to move forward," the aide said.
Auto provisions and South Korea's ban on shipments of beef from cattle older than
30 months are the thorniest issues facing the bilateral trade deal, the biggest
for the U.S. since the North American Free Trade Agreement in 1993.
U.S. Trade Representative Ron Kirk recently said that he "will promptly, but
effectively, address the issues surrounding the KORUS FTA, including concerns
that have been expressed regarding automotive trade," before bringing the deal
before Congress for ratification.
Kirk said he will prioritize beef exports before moving to the auto issue.
Pritchard hoped the two nations would be able to find a "creative way" to reach a
solution, and expected the deal to be ratified sometime before 2010.
But the FTA faces significant challenges in the Democrat-controlled Congress,
which fears the deal would undermine support from local trade unions -- a key
political base -- due to possible job cuts amid the worst recession in decades.
South Korean officials have said they will not renegotiate the FTA, while some
experts have suggested addressing shortfalls by way of side agreements or other
methods, without revising the agreement itself.
The report estimated that the Korea FTA "would add US$10 billion to $12 billion
to annual U.S. gross domestic product and around $10 billion to annual
merchandise exports to Korea."
hdh@yna.co.kr
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