Obama Victory Provokes Trade Worries In Asia
Tina Wang, 11.05.08, 4:40 AM ET
Asian countries are bracing themselves for the impact on trade policy of Barack Obama's victory in the U.S. presidential election Tuesday. Obama's win could delay a major trade pact with South Korea and could intensify pressure on China on the related issues of its currency valuation and the U.S. trade deficit.
In the weeks leading up to this election, Obama has voiced a tougher stance on trade negotiations with South Korea and China than has his Republican rival, John McCain. In particular, Obama has suggested he would push for a revision of the terms of a historic free trade agreement signed in 2007 by South Korea and the United States, after nearly a year of tough talks, and yet to be ratified by the two countries. The FTA would abolish most tariffs on goods traded between the two countries and would add tens of billions of dollars to bilateral trade.
"Koreans are all worrying about the FTA," said Dong Hyu Yang, an economist at Seoul National University. "Mr. Obama would like to renegotiate the agreement, but I wonder if this is possible from this side." The South Korean government may not be ready to renegotiate, but "it all depends on how tough Mr. Obama will get about this issue," he added.
South Korean legislator Chung Mong-joon, who is South Korea's wealthiest individual according to the Forbes rich list, said at a meeting of the ruling Grand National Party on Monday that "Obama has stated his opposition to the FTA on many occasions, so we should take this into consideration." South Korea had been pressing for Washington to submit the trade treaty to Congress for ratification by the end of 2008. But Obama has championed greater access to the South Korean market for U.S. automakers.
In his final campaign debate with McCain, Obama remarked that, since South Korea exports hundreds of thousands of cars to the United States, which in turn only sends few thousand cars into South Korea each year, "that is not free trade. We've got to have a president who is going to be advocating on behalf of American businesses and American workers." In 2007, South Korea shipped about 700,000 automobiles to the United States and imported 5,000 vehicles from there. Perceptions of heavy job losses from trade gained momentum in swing states such as Michigan, Ohio and Pennsylvania in the run-up to the election. (See "Trade Winds Blow In Denver.") Some Democrats have also called for relaxed South Korean restrictions on U.S. steel exports.
One major question will be how President-elect Obama responds to a protectionist-leaning Congress, which Tuesday turned over more Republican seats for Democratic gains. Some Senate Democrats have been vocal critics of China's currency controls and called for stepping up duties on Chinese imports.
Obama said in September that he was concerned about Chinese textile imports and would consider levying restrictions on Chinese goods, as well as promising to exert greater pressure on Beijing to allow the yuan more leeway to appreciate in order to narrow the $260 billion U.S. trade deficit with China. A China Daily editorial Wednesday analyzing the U.S. presidential election outcome responded to some of the concerns of U.S. trade critics: "As a growing market with 1.3 billion people, China is going to consume more goods made in America, creating job opportunities for the US."
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