A vital U.S.-South Korea trade pact

LOS ANGELES — Although America doesn't get a lot of things right in the Middle East policy-wise, it tends to do better for itself in Asia. That's extremely fortunate because Asia is well on its way to becoming the century's leading region. Making the right bets and decisions in the region is vital to America's long-term national interests.

The latest decision comes in the shape of a breakthrough trade agreement between American and South Korean negotiators, one that is critically important.

It must be said that the intense negotiations that took place in Seoul were at times as heated and as uncomfortable as a typical South Korean summer, which is saying something. Both sides were under fire from respective economic pressure groups in their home countries, which, rightly, could point to short-term hardships if the pact went forward. This is because every free-trade agreement comes with immediate costs.

Many businesses stand to get a jolt when tariffs are lowered on imported goods that suddenly retail at prices below the profit level of comparable domestically produced goods. The end result is what is often airily described as "economic dislocation."

But the counter-argument and chief justification for short-term, pain-inducing free-trade agreements is that they are a powerful antidote to economic stagnation. Slashing import taxes that lower the costs of consumer products in effect helps keep the national cost of living low. This is especially vital to the middle and lower classes, where every single dollar can count.

In the short run, almost every free-trade agreement leads to some near-term job loss. But boosting trade and investment between countries in a major way sparks economies overall, creates new jobs and leads to new entrepreneurial opportunities that also create unexpected jobs.

The U.S.-South Korean agreement is so powerful and obviously beneficial that the Japanese business-news media have been pleading for its government in Tokyo to duplicate a similar agreement with the Koreans. For the Bush administration, the deal is a considerable diplomatic — as well as economic — coup, though little-noticed, of course, against the endless whirlwind of depressing developments as Iraq slides further into the abyss.

The complicated deal took more than a year to come together and many inside and outside South Korea had predicted failure. Neither President George Bush nor South Korean President Roh Moo-hyun is exactly rolling in a commanding political position at home these days. Indeed, further application of whatever executive clout is left will be needed to achieve approval in the home legislatures of both countries.

But the agreement is monumental. For the U.S., it is the first bilateral free-trade pact with a large Asian country; a smaller one with Singapore was the first. For South Korea, it is further evidence that this rough-but-ready democracy is indeed determined to move beyond its historic provincialism and open up globally.

This new emerging attitude comes at a very interesting period in the evolution of South Korea. Relations with China have never been better — their economic relationship has been positively torrid. Seoul's former foreign minister, Ban Ki-Moon, is now ensconced as secretary-general of the United Nations, and the six-party talks appear to be coaxing North Korea into some kind of saner regional orbit.

It is not even impossible to imagine (down the road, of course) a better, healthier South-North Korean relationship, perhaps entwined in a sort of economic federalism. Such would comprise an economy of some 72 million people, which on the population chart would put it between France and Germany. Taking the role of a possibly federated Korea into America's strategic calculations is smart thinking.

The American Congress is going to be pressured by a number of scared economic constituencies and from growing dents in the popularity of economic globalization. But in the end, Congress has to take thegrander view. To kill this economically valuable and strategically vital accord would be a deep insanity. But America is in its pre-presidential election mode, which means some politicians (like some used-car salesmen) will do anything to get people to sign on the bottom line. So the U.S-South Korean deal, while fully negotiated, is not a fact of international life yet.

UCLA professor Tom Plate, a member of the Pacific Council on International Policy, is a veteran journalist who has worked at Time, Newsday and The Los Angeles Times.