Recently, a small but positive step was made toward possible ratification of the long-overdue United States-Korea Free Trade Agreement (KORUS FTA) as U.S. Trade Representative Ron Kirk announced that the United States is preparing for talks with South Korea Trade Minister Kim Jong-Hoon. Ratification of the agreement, which was signed by the United States and the Republic of Korea on June, 30, 2007, is critical for the United States for both economic and geopolitical reasons.

Within three years, the KORUS FTA would eliminate nearly 95 percent of existing tariffs and other barriers to trade, resulting in unfettered access to the world’s tenth largest economy and its 50 million consumers. As a result, trade flows with Korea--our 7th largest trading partner--would increase by an estimated $20 billion each year.  According to the The U.S. International Trade Commission the reduction of Korean tariffs and tariff-rate quotas on goods alone would add $10 to $12 billion to U.S. gross domestic product each year. And ratification would amount to a strong statement regarding America’s commitment to East Asia.  Despite this compelling logic, almost two and a half years since its negotiation the pact has yet to be ratified by Congress.

While President Obama has a number of other important issues on his agenda such as health care, the economy, and job creation, the KORUS FTA should not be overlooked.  If approved, the agreement will have significant benefits for financial services, one of the U.S.’s most competitive economic sectors. Under the terms of the agreement, American banks, securities firms, insurers and asset managers may establish or acquire financial institutions in Korea, establish branches, and supply a number of products and services cross-border.

But in order for the agreement to pass, the President will likely have to address concerns of the auto and beef industries. In fact, some members of Congress say that President Obama will not be able to sell a trade pact with Korea without considerable changes to the agreement in its present form.  In a recent Reuters article, Senator Sherrod Brown (D-OH) urged the renegotiation of U.S. trade deals and explained how the Trade Reform, Accountability, Development and Employment Act would help achieve this goal.  The proposed act would require the Government Accountability Office to evaluate the impact of NAFTA and would require the White House to give Congress a plan for renegotiating those outstanding pacts.  “We want trade and plenty of it, but we want trade under new rules.  The TRADE Act will help Congress and the White House craft a trade policy that makes sense and learns from our many mistakes over the past couple of decades,” Senator Brown told Reuters.

In order to preserve America’s leadership position and promote continued economic growth both here and abroad, Congress and the Administration must work together to ratify the Korea bilateral free trade agreement. Revitalizing our trade agenda will help to spur much needed economic growth and job creation.