Following a summer noted for its political polarization and gridlock in Washington, President Obama and Congress have an excellent opportunity this fall to act in a bipartisan way and to do something constructive about job creation.  By giving final approval to the US-South Korea Free Trade Agreement (KORUS FTA) Democrats and Republicans can demonstrate that they are capable of working together to help move the US economy forward.

This could hardly come at a better time.

Political divisiveness surrounding issues like the debate over the US debt ceiling, as well as lingering issues like sovereign debt concerns in the Euro-zone and unemployment and the housing market in the U.S., have had a significant negative impact on market, business and consumer psychology.  Financial markets and business and consumer confidence levels have all been negatively affected.  By approving the KORUS FTA, Democrats and Republicans can demonstrate that they are capable of overcoming partisan differences and working together to take specific steps necessary to improve economic expectations, create jobs and, ultimately, help revitalize the US economy.

The KORUS FTA has been developing over a period of years.  The treaty was first signed in June 2007.  A renegotiated version was signed in December 2010.  However, the agreement has not yet been ratified by the United States Congress or the National Assembly of South Korea and, thus, has not yet entered into force.  The Free Trade Agreement had been held up in Washington over a program to help displaced workers.  Ratification by both countries is now looking increasingly likely soon.

The economic impact of the KORUS FTA could be significant.  The US International Trade Commission has estimated that the Free Trade Agreement would boost US exports by as much as $10.9 billion during the first year it is in effect.  US free trade agreements with Colombia and Panama, which are expected to be ratified in Washington along with the KORUS FTA, would also contribute to economic growth.

Estimates of the number of jobs the KORUS FTA would create or protect in the US vary.  The Obama Administration has estimated that the Free Trade Agreement would create at least 70,000 new jobs.  The US Chamber of Commerce has estimated that the Free Trade Agreement would create or protect several hundred thousand jobs.  The AFL-CIO has said that manufacturing jobs would be lost.

The KORUS FTA has significant implications with respect to trade and competitiveness.  The treaty covers substantially all trade between the US and South Korea in goods, services and agriculture.  Under the Free Trade Agreement, nearly 95% of bilateral trade in consumer and industrial products would become duty free within three years.  The Free Trade Agreement creates significant new business opportunities in a number of industries, including chemicals, automobiles, agriculture, medical devices, finance, insurance and law.

The business opportunities the KORUS FTA creates in services are noteworthy.  The US runs an annual trade deficit of about $750 billion globally in goods, but has a $150 billion trade surplus in services.  By negotiating the reduction and elimination of barriers to the export of American services (like the work done by bankers and lawyers), the KORUS FTA sets an important precedent for the liberalization of service exports in future free trade agreements with other countries.  With services comprising approximately 80% of the US economy and representing a rapidly growing part of the economies of fast growing markets like China, India and Brazil, increasing the export of services represents a very important opportunity for the US’s highly educated workforce.

The KORUS FTA would be the US’s first Free Trade Agreement with a major Asian economy.  As a precedent for future free trade agreements, the KORUS FTA would be an important model for additional economic integration in the Asia-Pacific region, which represents more than half of global economic output.  The Free Trade Agreement would also be an important reaffirmation of Washington’s strategic engagement in East Asia.

With unemployment in the US at more than 9% and underemployment much higher, one of the top priorities of both political parties must be creating jobs.  With momentum now building for the passage of the KORUS FTA in both countries and with South Korean President Lee Myung-bak scheduled to meet with President Barack Obama in Washington on October 13, now is an opportune time for ratification of the Free Trade Agreement.  The KORUS FTA is an excellent example of one of a number of practical, bipartisan things Washington and the US private sector need to do together to create quality jobs and reinvigorate the US economy.