Thursday, November 19, 2009

Obama makes a commitment to pass KORUS FTA in 2010

Speaking with Fox News's senior White House Correspondent Major Garrett (a thaw in the WH-Fox war?), US President Barack Hussein Obama confirmed that he will pass the Korea-US free-trade agreement next year. Reuters (via CNBC) also has the story.

The question is whether it's the beginning of 2010, where the no-doubt bloody battle with his own party will be mostly forgotten by unionist votes by November's midterm elections, or after the midterm elections when a probably increase in GOP representation in Congress will help passage (NAFTA, you may recall, was pushed by Clinton and passed mostly by Republicans).

Quoting BHO from the video:
We are discussing this with South Korea. I want to get the deal done. ... The question is whether we can get it done at the beginning of 2010 or whether we can get it done at the end of 2010. There are still some details that need to be worked out. Overall, I think it's a potential good deal for US exporters, but there are certain sectors of the economy that aren't dealt with as effectively, and that's something I'm going to be talking with President Lee about.
This position is new, but it does represent a clearer picture of BHO's intent: Yes, he plans to pass it, and he plans to pass it next year. In other words, this isn't something he hopes will die on the vine and he will try to show Detroit (that's the major one of the "certain sectors of the economy" that he has made a good effort to get a better deal for them so that he can get his own party to pass it.

It's also significant that he is talking about the KORUS FTA in terms of being "a good deal for US exporters." This is not the mantra of a whole wing of his party, so it's not a given that, even as POTUS, he would buy into this pro-business notion.

I would like to see this free-trade agreement pass for a number of reasons, most notably that removing the perennial fights about opening markets would eliminate one of the major tools of the chinboista toolbox. And the other thing: overall, it would be good for both economies.

But I think a lot of the critics are missing the boat when it comes to figuring out what Detroit's problems are vis-à-vis South Korea... or the rest of the world. Simply put, they don't make the cars that the rest of the world wants. Those who have the means to get a big car in South Korea would prefer the quality of a Lexus or a Honda over a Buick.

For those with lesser means but who want to buy a decent car, in addition to Hyundais galore, there are already millions of General Motors vehicles available and on the road in South Korea, in the form of GM-Daewoo. In fact, in GM's global strategy, it is small cars coming out of South Korea that form much of GM's presence around the world.

Ford and Chrysler, for their part, will have to come up with a good quality but affordable and practical vehicle for the South Korean market (and Japanese market, European market, etc.), and I'm not sure that they have done that.

Thus, short of amending ROK law in such a way that would require South Koreans to buy a minimum number of Fords and Chryslers each year, I don't see how things are going to change even if all barriers are removed.

And already, South Korea is removing some serious barriers — like energy conservation-minded engine displacement taxes — in order to appease Detroit. Enough is enough.


  1. I don't know if you have been to Germany or not but there are plenty of Fords on the road there. Fords are much better quality then a GM-Daewoo car but unfortunately Ford hasn't been able to catch on yet in Korea due to the perception of poor quality in American automobiles.

  2. I've never been to Germany, only England, France, and especially Italy. In fact, my parents and I rented a car in Italy for an extended stay there. It was an Opel, which is GM-owned. I don't recall seeing many Fords at all.

    Do you know what kind of Fords you saw there? I wonder if they were actually European-made ones? You've been in Korea a while, so you might remember seeing Korean-made Fords running around (they were still easy to spot in the early 1990s, though I think they stopped making them in the 1980s sometime).

    Clearly the Big Three need to work on their marketing, but it seems they've convinced themselves that their problem lies completely in the trade barriers, which for the most part no longer exist. I'd like to see them succeed, but they seem to not want to evolve their game plan vis-à-vis Japanese and Korean markets.

    At the very bottom of this post I mentioned some effective campaigns American car companies could employ.


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