In Setback, U.S. and South Korea Fail to Agree on Trade


SEOUL, South Korea — President Obama and President Lee Myung-bak of South Korea failed to reach an agreement Thursday on a long-awaited free-trade agreement, and said they had decided instead to give their negotiators more time to work out differences, which revolved around Korean imports of American autos and beef.The two men said during a joint news conference that expected a deal to be reached soon. By soon, Mr. Obama said, he did not mean months. “We want this to be done in a matter of weeks,” he said. Even so, the delay is a setback for Mr. Obama, who is on a 10-day, four-nation swing through Asia that he has promoted as a mission to boost the American economy and create jobs. He has made trade — and in particular, the doubling of American exports over the next five years — a centerpiece of his agenda, and it had been widely expected that he would leave here with a deal with the South Koreans in hand. Negotiators worked furiously through the night to resolve the last-minute sticking points, and Mr. Obama and Mr. Lee spent two hours in private meetings on Thursday, part of that time alone. The two leaders discussed the trade agreement for about 40 minutes, White House officials said, but did not negotiate specific points. Ron Kirk, the United States trade representative and chief negotiator, told reporters afterward that the United States remains committed to reaching what he described as a “compelling” deal to help the president achieve his goal of job growth and doubling exports over five years. “We think this free trade agreement can play a central role in that,” Mr. Kirk said, adding that it was “absolutely not” a setback for the president. Mr. Kirk said American officials felt that the disparity in market access for the American auto industry “was one that we needed to address,” despite some “very productive” discussions between American and Korean officials over the last four days. Much of that time was spent discussing autos, he said. The trade accord, an update of the one the Bush administration negotiated and signed in 2007 under so-called fast-track authority that has since expired, has languished in the Democratic Congress. Mr. Obama, though, has thrown his weight behind it — while calling for some technical modifications that would be more favorable to American automakers and industrial unions — and with Republicans soon to take control of the House of Representatives, he has a better chance of getting it through. The announcement surprised close observers of the talks. Many had expected the two leaders to walk out with a deal in hand. “It is disappointing, and it is incumbent on us to keep driving toward consensus. This is an opportunity that we can’t let lapse, for economic growth in our country and also for a long-term presence in the region, particularly as it relates to China,” said Representative Peter Roskam, an Illinois Republican who had met the Korean foreign minister to discuss the trade accord. “My impression was that a deal would come together at the very last minute. I am surprised.” In Washington, Senator Max Baucus, the Democrat and chairman of the Finance Committee, also expressed disappointment. “The U.S.-Korea F.T.A. has the potential to increase American exports and create American jobs,” he said. “Presidents Obama and Lee agreed in June to resolve the outstanding beef and autos issues by today’s G-20 summit so we could get this deal done.” Mr. Obama is trying to repair frayed ties with the American business community, and the deal is a high priority of the U.S. Chamber of Commerce, whose president, Tom Donohue, has said he can round up the votes to get it approved. In the three years since Mr. Bush negotiated the first free trade pact, other nations, including Australia and Canada, have implemented similar deals, and the chamber makes the case that the United States is falling behind. “The landscape in Asia has changed,” said Tami Overby, vice president for Asia at the Chamber of Commerce, who is here monitoring the talks. “It’s much more competitive so I think the pressure on both sides to get this deal done is greater than ever.” Ms. Overby said the negotiators had a “bumpy night,” but that was not uncommon. “It’s a very typical intense Korean negotiation, where things do tend to go very much to the last minute, so this is not really unexpected,” she said. “It’s a bit like déjà vu from the original negotiation.” The biggest sticking point involves auto imports. In Washington, the Democratic leadership has been pushing forcefully for lower nontariff barriers to American exports of cars to South Korea, and for eased restrictions on American exports of beef, which has been a source of controversy since an outbreak of mad cow disease in 2003.
While the agreement would lower or eliminate tariffs on cars in both countries, the Obama administration pushed for further reductions in other barriers like emissions, mileage and safety requirements, and tax and insurance rules.
“If we can reach the standard for a fair trade agreement that the president has set out on particularly autos, we will move forward,” Jen Psaki, deputy White House press secretary who is traveling with Mr. Obama. “ We hope to continue making progress.” Automakers are complaining that the South Koreans want to impose onerous fuel efficiency standards — stricter than those required in the United States — as a back-door way of keeping American cars out of South Korea. Last week, the Ford Motor Company, the only Detroit automaker to survive the economic downturn without resorting to a government bailout, placed newspaper ads calling the deal unfair. Ford said it had backed every free-trade agreement approved by Congress since 1965 but said it could not do so for this one. The American activist group Public Citizen has also questioned the benefits of the deal, saying that in the short term it could cost as many or more jobs as would be created. Supporters say the deal would boost growth in both countries and solidify a longstanding alliance. “South Korea has been our most reliable Asian ally since the Vietnam War, and Washington has not done enough to recognize that in the recent past,” said Donald P. Gregg, who was the American ambassador here from 1989 to 1993, under President George H. W. Bush. The talks have been going on since last week, when top trade negotiators from both countries began meeting. They were joined on Monday by Mr. Kirk and his Korean counterpart, Kim Jong-hoon. Congressional staff have also been included, as have three members of Congress: SenatorDaniel K. Inouye, Democrat of Hawaii; Senator Thad Cochran, Republican of Mississippi, and Mr. Roskam. Trade is a tough sell in the United States, especially during tough economic times in hard-hit manufacturing communities where workers tend to view trade pacts as drawing American jobs overseas. A survey released Tuesday by the Pew Research Center found substantial skepticism about trade deals like the North American Free Trade Agreementand the policies of the World Trade Organization. The poll found that 35 percent of adults said that free-trade agreements had been good for the United States, while 44 percent said they had been bad. While most Americans say that increased trade with Canada, Japan and European Unioncountries — as well as Brazil, India and Mexico — would be good for the United States, reactions to increased trade with China and South Korea were more mixed, according to the survey, conducted Nov. 4-7 among 1,255 adults. The margin of sampling error was plus or minus 4 percent. Republicans and Republican-leaning independents who agreed with the Tea Party movement had a particularly negative view of the impact of free-trade agreements, the poll found.  

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