Ron Kirk

Stalled Korea FTA May Get a Boost

by Fran Smith on October 26, 2010

in Agenda for Congress, International, Trade

U.S. Trade Representative Ron Kirk is scheduled to meet today with Korean Trade Minister Kim Jong-hoon in San Francisco to discuss the pending U.S.-Korea Free Trade Agreement.  Hopes are high that with this discussion some lingering issues (autos and beef) holding up the pact could be resolved before President Obama’s upcoming meeting with South Korean President Lee Myung-bak at the G-20 Summit in Seoul in mid-November.

The National Association of Manufacturers has focused on the importance of the FTA in building market share for U.S. manufacturers, who, with the stalled trade agreement, are losing out to countries that have already signed trade agreements reducing tariffs for their goods and services exported to South Korea.  An earlier post at OpenMarket made that point as well.

South Korea has not been shy about entering into trade deals.  Just this month, the European Union and South Korea signed a trade agreement that opens up both markets.  According to the Korea Herald,

South Korea has so far signed six FTAs with 17 countries including Chile, Singapore, the four-member European Free Trade Association (Norway, Switzerland, Iceland and Liechtenstein), the 10-member ASEAN, India and the U.S. All of them except for the one with the U.S. have taken effect.

As Gabriel Sahlgren wrote in a 2007 CEI Issue Analysis:

The agreement is expected to abolish about 95 percent of tariffs on all industrial and consumer goods within three years, and remove most of the lingering 5 percent within a decade. According to a study by the U.S. International Trade Commission, the deal would increase U.S. GDP by $10.1-11.9 billion, and may boost annual trade between the countries by as much as $17.8 billion.  But critics ignore those gains.

* * * * *

The KORUS-FTA is not a perfect agreement, but it would generate so many economic and political gains for the U.S. that the benefits appear greater than its attendant problems. It would increase U.S. GDP by $10.1- 11.9 billion and bilateral trade by $17.8 billion annually, boost America’s standing in the region, and generate momentum for the cause of global free trade. Finally, to ratify it would bolster good relations with South Korea, an important ally, which negotiated and renegotiated the agreement in good faith.

An agreement that would make sense economically and politically — what’s not to like?

Policymakers’ letter asks tough questions re carbon tariffs

by Fran Smith on March 27, 2009

in Economy, Energy, Environment, Global Warming, International, Trade

Yesterday Ranking Members of both two House committees and two subcommittees wrote to the new U.S. Trade Representative Ron Kirk and asked him to clarify the Administration’s position on the issue of carbon tariffs.  The letter was sparked by recent remarks of Energy Secretary Steven Chu that the U.S. was considering levying tariffs against countries that haven’t taken steps to reduce carbon emissions.

In their letter Congressmen Joe Barton, Ralph Hall, Greg Walden, and Paul Brown cautioned:

Any emissions-related trade policy will be extremely complicated.  Careful consideration of the pros and cons — and legality — of any such policy is critical.  Poor decisions can lead to destructive trade wars that could put tens of thousands of U.S. workers out of a job, and severely harm our economy.

As Congress moves on proposals for mandated reductions in carbon emissions — such as a cap-and-trade scheme — the notion is gaining that “something has to be done,” such as carbon tariffs, so that the U.S. can compete with countries that haven’t committed to emission reductions.  The Republican lawmakers — all on committees that have some jurisdiction on global warming issues — presented a list of hard and focused questions to USTR Kirk on what the Administration is planning and whether some of the serious downside risks of border measures have been considered. (The congressmen are Ranking Members on the Committee on Energy and Commerce and its Subcommittee on Oversight and Investigations and the Committee on Science and Technology and its Subcommittee on Investigations and Oversight.)

The letter is a formal request, and the USTR is obligated to respond to the policymakers’ questions.  Maybe this will take some of the wind out of the carbon tariff sails, especially since climate negotiators from nearly 190 countries will be meeting in Bonn, Germany starting March 29 to come up with concrete plans for what they hope will be an agreement in December.

So, in the midst of a deep worldwide recession, countries will be planning to make energy less affordable, to force some major emitters out of business, and maybe start a trade war over border tariffs.  Don’t we already have enough economic problems to contend with?

(Hat-tip: Iain Murray)

No “hysteria” about trade — just some facts

by Fran Smith on March 19, 2009

in Odds & Ends

I admire Dan Ikenson’s work on trade issues at Cato. Usually I agree with his views. A notable exception is his post yesterday on Cato’s blog – “Too much hysteria about trade.”

No, Dan wasn’t hitting the current climate of China-bashing or the Teamsters’ on-going campaign against Mexican trucking and NAFTA or the “Buy American” provisions in the stimulus bill. Dan instead was taking to task newspapers like the Washington Post that have been warning readers about the rising tide of protectionism in this world economic downturn.

He writes:

The fact of the matter is that there isn’t any discernible trend toward protectionism in the United States or in the world right now. World leaders issue warnings about the consequences of protectionism, but there are not trends. There are incidences, but no trends.

He uses now-US Trade Representative Ron Kirk’s Senate testimony as evidence of the Obama Administration’s support for open trade and for enforcement of trade rules.

I beg to differ. Kirk’s testimony, of course, reiterates President Obama’s Trade Agenda, which, while including some good rhetoric about the importance of open trade, strongly endorses the need to focus on non-trade issues in trade agreements, such as those involving labor and the environment. Here’s what Kirk said:

I respectfully submit that two strong steps toward restoring domestic confidence in open markets are a real and renewed commitment to enforcement of our trade rules, including those addressing labor and the environment,

And –

. . . to ensure that the way we promote trade reflects our country’s values about economic progress and justice, including through the advancement of internationally recognized labor and environmental standards.

Such issues, as Jagdish Bhagwati has often written, really act as non-tariff trade barriers and force poorer countries to adopt our regulatory schemes in these areas (to “level the playing field”) even when they don’t have the resources.

Dan may not realize that U.S. policymakers such as the Energy Department Secretary and others are seriously considering imposing carbon tariffs on countries (read China and India) that aren’t taking appropriate steps to restrict carbon emissions. Again, that would be a good way to level the playing field and improve U.S. competitiveness. Not protectionism?

Food safety is another area where protectionism may rear its ugly head under the guise of protecting consumers but actually setting detailed standards that may rely more on procedures than the safety of the end product. A bill recently introduced in the House could easily be used to block foreign competition.

And let’s not forget the stimulus package and the infamous “Buy American” provisions, which mandate that any company receiving government funding has to use “made in America” goods, such as iron and steel. The stimulus legislation also restricts companies receiving bailout funds from hiring foreign workers and restricts those firms receiving Trouble Assets Relief Program (TARP) funds from hiring foreign nationals holding H-1B visas unless they can prove they could not hire U.S. citizens instead.

The Obama Team’s emphasis on enforcement issues seems benign to Dan. But take a look at what Rep. Sander Levin, head of the trade subcommittee of the House Ways and Means Committee is cooking up on trade enforcement. Besides promising lots more WTO complaints, the legislative plan is to put back in place provisions on U.S. antidumping and countervailing duties that were changed under President Bush because they weren’t WTO-compliant. But don’t interpret that as protectionism, Levin was quoted as saying, since its purpose is to “enforce the rule of law and the openness of markets.”

“Hysteria” about trade protectionism?  Think it’s not coming from the media, Dan, but from trade protectionists.