FILE – In this Nov. 8, 2010, US Trade Representative Ron Kirk arrives to meet his South Korean counterpart Kim Jong-hoon at the Foreign Ministry in Seoul, South Korea. 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. (AP Photo/Ahn Young-joon, File)
WASHINGTON (AP) — The Obama administration is looking abroad to create thousands of jobs at home, with a newly forged trade agreement with South Korea — the largest since NAFTA 16 years ago — that could mean a big boost for the U.S. auto industry.
The White House says the pact could put as many as 70,000 Americans to work, welcome news on a day when unemployment figures showed nearly stagnant job growth. Exports of U.S. goods to South Korea could soar to $10 billion, drawing the approval of the U.S. Chamber of Commerce as well as some Republicans.
After a week of marathon negotiations, representatives from both countries broke through a stalemate Friday morning on outstanding issues related to the automobile industry, which have been a sticking point in the talks. The agreement would be the largest U.S. trade deal since the 1994 North American Free Trade Agreement, or NAFTA, with Canada and Mexico and would bolster U.S. ties with the fast-growing South Korea economy.
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 percent tariff on U.S. trucks immediately.
President Barack Obama hailed the agreement as a “landmark trade deal” that would support at least 70,000 U.S. jobs.
“We are strengthening our ability to create and defend manufacturing jobs in the United States, increasing exports of agricultural products for American farmers and ranchers and opening Korea’s services market to American companies,” Obama said in a statement.
South Korean President Lee Myung-bak praised the deal as bringing huge economic benefits to both countries and further boosting the two nations’ alliance.
“The accord is significant because it lays the groundwork for a ‘win-win’ relationship by reflecting the national interests of Korea and the United States in a balanced manner,” Lee said in a statement posted on the presidential website.
The White House had hoped to strike a deal last month during Obama’s trip to Seoul for the G-20 economic summit, but both countries were unable to broker a compromise on issues pertaining to trade of autos and beef. U.S. Trade Representative Ron Kirk and his counterpart, Korean Trade Minister Kim Jong-hoon, resumed negotiations outside Washington this week.
For Lee, the agreement comes amid harsh criticism at home that his response to a deadly artillery attack last month by North Korea on a South Korean island has been weak and indecisive. His government, which had once vowed it would not renegotiate the trade deal, could face harsh criticism at home if the compromises with Washington on autos are seen as a capitulation.
The agreement did not address issues with the beef trade. The U.S. had sought greater access to the beef market in South Korea, which restricts imports of older U.S. meat. A senior administration official said discussions on beef are ongoing. The official insisted on anonymity to discuss private negotiations.
The wider agreement would eliminate tariffs on more than 95 percent of industrial and consumer goods within five years, a move that the U.S. International Trade Commission estimated would increase exports of U.S. goods by at least $10 billion. The deal would also open up South Korea’s vast $560 billion services markets to U.S. companies.
Lee expressed hope for a quick ratification of the deal by the legislatures of the two countries. Obama administration officials offered no timeline for ratification on Capitol Hill.
Associated Press writers Kelly Olsen and Kim Kwang-Tae contributed to this report from Seoul.