The American Spectator

At Large

An Economic Retreat from East Asia

By Doug Bandow on 4.27.09 @ 6:06AM

(Page 2 of 2)

China's expansion is changing East Asia economic patterns. Noted Schott: "The region is the hotbed of regional trading arrangements, with a variety of pacts differing in scope and coverage." Driving this process is China's growing economic role. The impact on the ROK has been particularly significant. Observed Robert Kapp, a long-time president of the United States-China Business Council: "The growth of Korean-Chinese economic action has been even more impressive than China's expanding ties with other trade and investment partners." 

Beijing is not content to rely on osmosis. The U.S.-China Economic and Security Review Commission warned: "China has linked its growing economic power with strong diplomatic initiatives throughout Asia. China's softer approach to the region has been dubbed a smile campaign or charm offensive, but it is more than just that -- China has injected new energy into bilateral partnerships and multilateral trade and security arrangements."

In fact, Beijing has been negotiating or discussing free trade agreements with Australia, Japan, South Korea, and Taiwan, among other countries. The economic and political barriers to such arrangements are obvious, but the fact that the PRC is pursuing this strategy -- and that America's three leading military allies in the region as well as another one-time ally and long-term friend, which enjoys an implicit security guarantee from Washington, view FTAs with China as a serious option -- symbolizes the challenge now facing Washington. 

South Korea is not waiting for the U.S. The ROK has negotiated FTAs with the ASEAN (Southeast Asian) states and several European countries. Moreover, reports the Korea Economic Institute: "In March, Korea and the EU announced the tentative conclusion of FTA negotiations, while Korea also announced that it will commence FTA negotiations with Australia, New Zealand, and Peru. The EU deal, when completed, will be the world's largest bilateral trade agreement, eclipsing the still unapproved U.S.-Korea FTA."

Yet the U.S.-ROK FTA sits unratified in Washington. Washington's influence in East Asia is slowly ebbing. Rather than retreating quietly, the U.S. should strengthen its economic role by expanding trade and investment ties throughout the region. Washington should pursue FTAs with Japan and Taiwan. But first Congress should ratify the already-negotiated accord with South Korea. 

The primary benefit of the agreement is economic. But expanding trade ties offer geopolitical advantages as well. The Bush administration may have overstated the benefits, but only slightly, when it argued: "By boosting economic ties and broadening and modernizing our longstanding alliance, it promises to become the pillar of our alliance for the next 50 years, as the Mutual Defense Treaty has been for the last 50 years." Seoul has a similar objective. Wrote Kozo Kiyota and Robert Stern of the University of Michigan: "Korean officials hope that there will be positive spillover effects from an FTA on the broader bilateral relationship."

Moving forward will require genuine statesmanship backed by political courage from the Obama administration. Failing to ratify the South Korean FTA is likely to result in permanent economic and geopolitical damage. Warned Jeffrey Schott: "The stakes -- in terms of both U.S. economic and security interests in East Asia -- are too great, and the costs too high, to reject the pact or defer a decision."

This would be a high price to pay at any time, but especially when China is rapidly expanding its influence throughout East Asia.

Letter to the Editor

topics:
Trade, South Korea, China