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December 12, 2010 Page 10<br />

US, South Korea Free Trade Deal a ‘Win-Win’<br />

BBC<br />

Both the US and South Korea have hailed their<br />

long-awaited free trade agreement negotiated<br />

this weekend as a “win-win” deal.<br />

However, the final pact, which was originally<br />

signed in 2007 but never ratified, has<br />

been heavily criticised by South Korean opposition<br />

parties. They branded the compromises<br />

made by Seoul “humiliating and treacherous”.<br />

The deal needs parliamentary approval in both<br />

countries be<strong>for</strong>e it can be finally ratified.<br />

President Barack Obama said on Saturday<br />

the agreement “includes several important<br />

improvements and achieves what I believe<br />

trade deals must do. It’s a win-win <strong>for</strong> both<br />

our countries”.<br />

South Korean Trade Minister Kim Jong-<br />

Hoon also described the deal as a “win-win”.<br />

Negotiations on the free trade deal broke down<br />

in the run-up <strong>to</strong> last month’s G20 meeting of<br />

leading economies in Seoul.<br />

Car tariffs<br />

A key sticking point <strong>to</strong> the 2007 deal<br />

were tariffs imposed by South Korea on US<br />

car imports.<br />

“We have been hit by the North with<br />

cannons and now we we’re being hit by the<br />

US with the economy”<br />

But a compromise was agreed - the US<br />

By Heidi Przybyla and Mike Dorning<br />

Bloomberg<br />

President Obama said the deal was “essential” in boosting<br />

US exports.<br />

will lift its 2.5% tariff on South Korean cars<br />

after four years, while South Korea will halve<br />

its 8% tariff with immediate effect, be<strong>for</strong>e lifting<br />

it in four years.<br />

South Korea also agreed <strong>to</strong> allow the US<br />

<strong>to</strong> export up <strong>to</strong> 25,000 cars a year that do not<br />

meet its more stringent safety requirements. In<br />

return, the US agreed that South Korea could<br />

extend its tariffs on US pork imports <strong>for</strong> another<br />

two years.<br />

The deal does not address US concerns<br />

about tariffs on its beef exports.<br />

‘Cheated’<br />

The deal has proved deeply unpopular<br />

among opposition politicians in South Korea.<br />

“We have been hit by the North with<br />

Lawmakers may embrace plans by President<br />

Barack Obama’s debt commission <strong>to</strong> curb the<br />

costs of Social Security and $1 trillion in tax<br />

breaks even as comprehensive deficit reduction<br />

hinges on whether both parties seek confrontation<br />

or accommodation.<br />

While the commission lacked the votes<br />

<strong>to</strong> send its proposal <strong>to</strong> Congress, bipartisan<br />

agreement on the panel will open a debate<br />

over the retirement system and the tax breaks,<br />

which include the home-mortgage deduction,<br />

several lawmakers and analysts said.<br />

Any significant ef<strong>for</strong>t confronts what<br />

commission co- chairman Erskine Bowles<br />

called “the threat pressed upon us by these<br />

ever-increasing deficits.” Senate Budget Committee<br />

Chairman Kent Conrad, a Democrat,<br />

wants Obama <strong>to</strong> convene a summit, and House<br />

Republicans Dave Camp, incoming Ways and<br />

Means Committee chairman, and Paul Ryan,<br />

who will head the Budget Committee in January,<br />

say they’ll use the plan as a basis <strong>for</strong> hearings<br />

on the deficit.<br />

“I put the likelihood at 15 percent that<br />

we would have any kind of deficit-reduction<br />

package in the next two years,” said Diane<br />

Swonk, chief economist <strong>for</strong> Mesirow Financial<br />

Inc. in Chicago. “That’s not that high. But<br />

it’s higher than I would have put it two weeks<br />

ago.”<br />

Obama thanked the panel <strong>for</strong> highlighting<br />

“the magnitude of the challenge facing us”<br />

without embracing specific proposals. White<br />

House Budget Direc<strong>to</strong>r Jack Lew has invited<br />

commission members <strong>to</strong> meet.<br />

“I would prefer <strong>to</strong> even go further in<br />

deficit reduction than this package,” Conrad, a<br />

commission member, said yesterday on “Fox<br />

News Sunday.” He called the proposal, backed<br />

by 11 of the panel’s 18 members, “a strong beginning,”<br />

with the “next logical step” a meeting<br />

between Obama and bipartisan Congress<br />

leaders.<br />

Pressures <strong>to</strong> extend Bush-era tax cuts<br />

and respond <strong>to</strong> 9.8 percent unemployment will<br />

hamper fiscal restraint <strong>for</strong> now, said Lou Crandall,<br />

chief economist at Wrightson ICAP LLC,<br />

cannons and now we we’re being hit by the<br />

US with the economy,” said Park Jie-Won of<br />

the Democratic Party, referring <strong>to</strong> North Korea’s<br />

recent shelling of a border island.<br />

The Liberty Forward Party said the public<br />

had been “cheated by the deal”.<br />

“The concession garnered in the lives<strong>to</strong>ck<br />

products was not significant, so it was<br />

a deal that failed <strong>to</strong> meet national interests,”<br />

said the party’s Kwon Sun-Taik.<br />

Boosting exports<br />

President Obama hailed the deal on Saturday<br />

as “essential” <strong>for</strong> boosting US exports.<br />

“The agreement will contribute significantly<br />

<strong>to</strong> achieving my goal of doubling US<br />

exports over the next five years. “In fact, it’s<br />

estimated that <strong>to</strong>day’s deal will increase American<br />

economic output by more than our last<br />

nine trade agreements combined,” he said.<br />

Domestic consumption currently accounts<br />

<strong>for</strong> more than two-thirds of the US<br />

economy, and Mr Obama is keen <strong>to</strong> re-balance<br />

the economy by increasing exports. This is<br />

also a key strategy in securing a sustainable<br />

recovery from the downturn.<br />

The US recovery remains fragile, with<br />

disappointing unemployment figures released<br />

on Friday contributing <strong>to</strong> concerns that the<br />

world’s largest economy is struggling <strong>to</strong> shake<br />

off the recession.<br />

Lawmakers Accept Cuts <strong>to</strong> Social Security, Tax Breaks as Debt Plan Fails<br />

a unit of London-based ICAP Plc, the world’s<br />

largest broker of trades between banks.<br />

“It is difficult <strong>for</strong> the congressional<br />

leadership <strong>to</strong> drive two conflicting processes<br />

at once,” Crandall said. “Congress is probably<br />

going <strong>to</strong> have <strong>to</strong> take things one step at<br />

a time.”<br />

The federal budget deficit <strong>for</strong> the fiscal<br />

year ended Sept. 30 was $1.3 trillion or 8.9<br />

percent of gross domestic product, according<br />

<strong>to</strong> a calculation released by the Treasury<br />

Department in Oc<strong>to</strong>ber. Voters consider the<br />

shortfall their second most pressing concern,<br />

according <strong>to</strong> a Bloomberg National Poll.<br />

The plan by Bowles, a <strong>for</strong>mer chief of<br />

staff <strong>to</strong> President Bill Clin<strong>to</strong>n, and Republican<br />

co-chairman Alan Simpson, a <strong>for</strong>mer sena<strong>to</strong>r<br />

from Wyoming, would increase taxes by $1<br />

trillion by 2020. It would scale back or eliminate<br />

hundreds of tax deductions, exclusions or<br />

credits such as those allowing homeowners <strong>to</strong><br />

write off interest on their mortgage payments.<br />

It would also cut individual and corporate income<br />

tax rates.

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