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The U.S. and South Korea have reached an agreement on a free trade deal sought by the Obama administration to boost American exports and create tens of thousands of U.S. jobs in the largest trade pact in more than a decade.
Negotiators reached a deal on outstanding issues related to the automobile industry, which have been a sticking point in the talks, said a person close to the discussions. The person spoke on condition of anonymity in advance of an official White House announcement.
South Korea is agreeing to allow the U.S. to lift a 2.5 percent tariff on Korean cars in five years, instead of cutting the tariff immediately. The agreement also allows each U.S. automaker to export 25,000 cars to South Korea as long as they meet U.S. federal safety standards and allows the U.S. to continue a 25 percent tariff on trucks for eight years and then phase it out by the 10th year. South Korea would be required to eliminate its 10 perent tariff on U.S. trucks immediately.
The agreement would be the largest U.S. trade deal since the 1994 North American Free Trade Agreement between with Canada and Mexico, and would bolster U.S. economic ties with South Korea, the world's 12th largest economy.
The White House had hoped to reach an agreement last month when President Obama traveled to Seoul, but both countries were unable to broker a compromise on outstanding issues. U.S. Trade Representative Ron Kirk and his counterpart, Korean Trade Minister Kim Jong-hoon, resumed negotiations in Washington this week.
The agreement must still be ratified by lawmakers in both countries.
Obama pledged in his State of the Union address to aggressively seek new overseas markets for U.S. exports. Administration officials have hoped that finalizing a deal with South Korea could lead to breakthroughs on pending agreements with Panama and Colombia.
The agreement comes amid weak economic reports Friday that put U.S. unemployment at 9.8 percent, with job growth slowing more than administration officials had expected. The White House has sought to cast the trade deal as a jobs-creator at home and a moneymaker for U.S. companies.
The U.S. and South Korea reached a landmark deal in 2007 that slashed tariffs and other barriers to commerce. But the pact has been in limbo since then, due in part to political changes in both countries and the Obama administration's demands that South Korea make concessions on trade in autos and beef.
Bilateral trade between South Korea and the U.S. totaled $66.7 billion in 2009, down sharply from $84.7 billion in 2008 as global commerce suffered during the economic downturn.
The South Korea deal has been widely supported by those in the private sector and the Chamber of Commerce, which has criticized other administration policies as anti-business.
"This trade agreement, once finalized, will provide jobs, products, and renewed sense of partnership to both the United States and South Korea," said Cody Lusk, president of the American International Automobile Dealers Association.
But Lori Wallach, director of the liberal-leaning advocacy group Public Citizen, criticized the deal, saying it would lead foreign investors to move U.S. jobs overseas and put Obama's political future in peril.
"Choosing to advance Bush's NAFTA-style Korea free trade agreement rather than the new trade policy President Obama promised during his campaign will mean more American job loss and puts the White House at odds with the majority of Americans who, polling shows, oppose more-of-the-same job offshoring agreements," Wallach said in a statement.
This program aired on December 3, 2010. The audio for this program is not available.
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