KORUS FTA to Be Implemented

Korea and the U.S. signed a free trade agreement in Washington D.C. on June 30. However, on the eve of the signing ceremony, the Democratic Party leadership released a statement opposing the FTA. With Democrats attempting to block the FTA amid the diminishing influence of President Bush in Congress, and with considerable opposition in Korea’s National Assembly, expectations are that the ratification of the FTA by the end of this year will not be easy.

But the prevailing idea in the two countries is that the FTA will ultimately take effect even if it takes a couple of years, given that the U.S. Congress has never vetoed an FTA and that experts of the two countries have positively assessed the FTA as an “agreement which strikes the right balance of benefits.”

Opposition from Democrats-

Speaker of the House Nancy Pelosi, House Majority Leader Staney Hoyer, Committee on Ways and Means Chairman Charles Rangel, and Chairman of the House Ways and Means Trade Subcommittee Sander Levin made it clear that they “cannot agree on the KORUS FTA as is” in a statement. All of them voted against the Central American Free Trade Agreement in 2005, citing the possible far-reaching ramifications on the country’s economy. But they actively supported the FTAs with Peru and Panama.

The statement which mainly discusses the FTA’s possible harmful effects on the country’s automobile sector seems to aim at appealing to labor unions, the strong United Auto Workers, in particular, prior to the presidential election.

Democrats and the U.S. auto industry have been displeased with the auto market opening negotiations of the FTA from the beginning. That is because the Korea imports just 5,000 U.S. cars annually, while it exports 700,000 cars to the U.S.

In particular, leading members of the party are increasingly feeling the pressure of making a clear statement on various issues as the party’s preliminary elections are scheduled to start in January. Senator Hillary Clinton also made it clear that she opposes the KORUS FTA in her speech in Detroit last month.

The FTA Will Not Be Ratified by Year’s End-

Kim Jong-hoon, Korea’s chief delegate for the KORUS FTA negotiations, said after the signing ceremony, “The White House will not submit the ratification motion on the KORUS FTA until it is sure that it has garnered enough votes for ratification.” He said, “It is expected that the White House will start vote calculations this fall. It will submit the motion if it is confident. If not, it will take time to persuade lawmakers.” He said that it could take about 18 months until ratification.

Korea’s political landscape could also serve as a variable. The government plans to submit the ratification motion to the special session of the National Assembly in September. It wants to see ratification by the year-end, after deliberation from the Unification, Foreign Affairs, and Trade Committee and a plenary session vote of the National Assembly.

However, some expect that ratification will be hard to accomplish this year because 64 lawmakers who are members of an anti-KORUS FTA association plan to investigate the FTA.

If the motion is transferred to the next term of the National Assembly, ratification is expected to happen in the second half of next year because it will take time to form new committees.

Politics in the U.S. is also adding to the uncertainty. The Democratic Party leadership has decided to “discuss the thorny FTAs with Korea and Colombia after ratifying the ones with Peru and Panama.”

As the presidential election will dominate the political landscape from February in the U.S., it would be ideal for the Congress to ratify the KORUS FTA by the end of this year, which is a very tight time schedule. According to parliamentary rules, President Bush will not be able to submit ratification motions for the KORUS FTA until October 1. The International Trade Committee should submit its assessment within 90 days after signing, which will be in September, and a ratification motion will be submitted after that.

After the president submits the motion, the Senate and House Standing Committees will deliberate it for 45 days at maximum. However, considering the Thanksgiving holidays and recess, it will likely take longer. Furthermore, the Congress is effectively in recess in August, while the committees are expected to call for hearings, which could lead to further delays in ratification.