KORUS Update

Getting trade agreements passed is like solving a Rubik’s cube: one wrong-colored square and you are not really there. But it finally looks like all the surfaces have lined up and that passage could come before summer.

1. The negotiations on substance were supposed to be completed at the G20 meeting in Seoul in November—a minor embarrassment for the administration--but they nonetheless got wrapped up in December; Peterson’s Jeff Schott explains all. Immediate tariff cuts on autos and light trucks have been deferred a few years, but Korea agreed to some regulatory reforms that took the pressure off that was coming from Detroit and the unions; even the autoworkers are now on board. Adjustments also were made to a number of other small issues that will help ease passage (pork—literally—L-1 visas, some patent issues in pharmaceuticals).
2. Republican hawks have been fretting that the KORUS would open the door to trade with Kaesong; one hopes that has been foreclosed by an executive order on the issue.
3. The last piece, however, was Colombia. Quite usefully in our view, the Republicans insisted on treating the three outstanding agreements—Panama is the third—as a package. The outstanding labor issues with Bogota now appear to be resolved as well. Not all will enjoy equal support, and the coalition supporting them will be bipartisan with both Democratic and Republican defectors in the anti-trade wings of both parties. But Korea looks like it may be in better shape than others. Again, Jeff Schott explains all.