Business groups urge fast action on Korean trade deal after EU vote

Business groups are pressing for urgent action on the U.S.-Korea free-trade agreement after a similar deal between the European Union and South Korea cleared its final hurdle on Thursday

If the EU deal, which goes into effect in July, is implemented first, U.S. exporters will be hurt, the groups said.

The U.S.-Korea free-trade agreement was signed in 2007 and renegotiated by the Obama administration in December. The administration is preparing to send the text of the agreement to Congress but is trying to line up key Democrats in support first.

“Every day the clock ticks we are losing exports,” Chuck Dittrich, vice president at the National Foreign Trade Council, said in an interview Friday. “Past experience shows it takes up to six months for an agreement to enter into force after Congress passes it.”

He said the U.S.-Korea deal needs to be approved in a “matter of weeks” for U.S. exporters not to be put at a serious disadvantage compared to European competitors.

“Yesterday’s passage of one of the largest trade deals in history should serve as an urgent wake-up call to American policymakers. … We need to pass the U.S.-Korea, Colombia and Panama free trade agreements (FTAs) as soon as possible,” the Business Roundtable said in a statement.

"It’s clear the EU is jumping ahead of the U.S. in the global trading game. Now the question remains: Will Washington act so that we can catch up?" the U.S. Chamber of Commerce's Tami Overby said in a statement.

The EU-South Korea agreement was approved Thursday by the European Parliament 465 to 128, with 19 abstentions.

A key reason for the delay is the Republican demand that the Panama and Colombia free-trade agreements be submitted at the same time as the Korea deal. Democrats argue that the Panama deal is a few months away from being ready, as Panama is finishing an update of its labor laws. The Colombia deal is more problematic, since Colombia needs to show progress over anti-union violence. The White House hopes to submit that by the end of 2011.
 
The European Parliament had resisted passing the EU-Korea deal over objections from its automobile industry. To mollify the sector, Parliament convinced trade negotiators to establish a safeguard clause that would allow special tariffs to be imposed if the deal leads to a surge in imports into the EU. Other issues involved limitations on incentives for the use of non-Korean parts in Korean cars exported to the EU.

The EU deal is to come into effect in July 2011, and the Obama administration has said it wants Congress to vote on the deal by then. On Thursday James Hoffa, the powerful head of the Teamsters union, vowed to fight to block the deal.

The United Autoworkers union backs the deal, however, since President Obama won new provisions for autos in December.

U.S. auto exports, along with financial services and chemical exports among a host of other industries, will be at a disadvantage compared to European products if the EU deal goes into effect first.

Under the agreement, the 8 percent tariff on EU cars exported to Korea be removed, and EU car makers will be able to sell their products without being subject to additional testing.

This post was updated at 12:02 p.m.

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