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Trade in The Balance

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The recent failure of the U.S. and South Korea to reach a final agreement on the U.S.-South Korea Free Trade Agreement should be viewed as a temporary setback. It underscores the difficulty of negotiating free trade agreements in the midst of efforts to ignite global economic recovery. The Obama Administration’s desire to double exports over the next five years can still be realized once the U.S. and South Korea resolve the issues of the importation of U.S. automobiles and beef. Since trade accounts for roughly one quarter of U.S. gross domestic product (GDP), the impetus to reach an agreement to boost market access for additional sectors will ultimately drive a positive outcome.

A modified agreement acceptable to the auto and beef industries will help the President in what is sure to be a difficult sell to his own party in Congress, a Republican Majority in the House and a reduced Democratic majority in the Senate. However, this challenge offers the President the opportunity to demonstrate he can deliver trade deals that benefit domestic job creation, maintain U.S. leadership in free trade and promote his trade agenda as a necessary tool for economic growth and recovery.

South Korea President Lee Myung-bak faces equal domestic political pressure; he remembers well the street demonstrations over fears of importing U.S. beef infected with Mad Cow disease that brought down his predecessor’s government. South Korea is aggressively pursuing free trade agreements, having just signed a new agreement with Peru one week after negotiations stalled with the U.S. American fears of missing out on trade opportunities because there is no agreement are highlighted by the U.S. pork industry’s concern over losing market opportunities to the European Union which has already penned an agreement with Seoul.

Increasingly, the intersection of trade, economic and foreign policies will form the basis for U.S. global engagement. This is especially true for Asia where China and India are quickly becoming important players and partners with common interests. Both nations are very reliant on free trade and are constantly seeking agreements around the world. U.S. leaders are under increasing pressure to respond and be nimble in this ever changing environment. President Obama and the new Congress should take heed and try to work together for durable solutions. Our nation’s economic recovery and trade agenda are in the balance.

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