The Big Beef Backlash

A year ago, Seoul and Washington cheerfully celebrated the signing of a trade deal that looked like a major victory for the friends of globalization. This deal opens doors between top trading powers that already deal heavily with each other. America is South Korea's second largest trading partner, and South Korea is America's seventh largest. For Washington, this would be the biggest deal since Bill Clinton closed the North American Free Trade Agreement in 1994. Struck after 14 months of tug-of-war negotiations, it would further reduce tariffs and other barriers, widening a trade channel that Asian rivals of South Korea, like Japan and China, would likely feel compelled to match—giving global trade new momentum at a time when multilateral global-trade talks at the WTO are stalled.

That was then. A year later, a backlash in both capitals threatens to scuttle the ambitious accord. Playing to a surge in public support for trade protection, Barack Obama and Hillary Clinton, the final Democratic contenders for the U.S. presidency, oppose congressional ratification of the FTA, citing its damage to American manufacturers, particularly automakers. And in South Korea the passion is even stronger: every night thousands of citizens stage candlelight vigils to protest their government's recent decision to allow U.S. beef imports, which they claim are prone to mad-cow disease. Amid the growing anti-American sentiment, opposition parties have joined hands to keep the National Assembly from approving the FTA. "In both countries, the FTA issue is being politicized," says Huh Yoon, a trade expert at Seoul's Sogang University. "Despite its economic benefits, political motives threaten to kill the deal."

It would be a costly failure. For Korean manufacturers the deal would mean easier access to the United States, their No. 2 export market, after China. Higher exports of autos, electronics and textiles could add 6 percent to South Korea's GDP by 2018, according to government forecasts. On the American side, farmers and cattle growers as well as banking and other service providers would gain. Experts believe that the U.S.-Korea agreement could also grease the wheels of commerce across the Pacific, as the deal will force Japan and China to lower their trade barriers against the United States. "Through the FTA with Korea, the U.S. can increase its presence in the whole of Asia," says Chang Jae Chul, a researcher at the Samsung Economic Research Institute. "The deal can also check China's dominance in the region."

Right now this is something of a sideshow in the U.S. presidential campaign, but it's center stage in South Korea. Since the new government of President Lee Myung-bak decided in April to reopen its beef market to the United States, public opinion has turned on the trade accord. Lee, a champion of the U.S.-Korea alliance, made the decision shortly before he met for the first time with President George W. Bush, a big supporter of the trade accord. (The presumptive Republican candidate, John McCain, also backs the deal.)

Lee's move reversed a 2004 ban on American beef that followed the outbreak of mad-cow disease in the United States, and set off a storm. Fired up by often sensational media reports about risks in U.S. beef, students and civic activists filled Seoul streets, demanding more import restrictions. Expert assurances on the safety of U.S. beef did little to calm the movement, which quickly morphed into a campaign against the government. Liberal forces and opposition parties cite the beef case as exhibit A for their charge that Lee's conservative administration favors free trade and big business at the expense of farmers and workers. Lee's approval rating fell 35 points, to about 30 percent, in the 100 days after his Inauguration. Last month, he apologized to the nation for "not seeking people's understanding" on the beef issue, bowing deeply four times.

The U.S. Congress has not yet moved to work on the accord, despite Bush's repeated requests. The Democrats want to keep the Korean beef-market opening, and to widen the access of U.S. carmakers to the South Korean market. With his time running out, Bush is urging Congress to ratify the deals with South Korea as well as Colombia and Panama to give the U.S. "access to nearly 100 million customers."

The fight's not over. Koreans, who face growing competition from cheap labor in China and high tech in Japan, may not let beef sour a major new opening to the United States. And the Democrats may reconsider their position if they take the White House. Nevertheless, as thousands marched along Seoul streets till midnight, prospects for the deal looked dim. I AM TOO YOUNG TO DIE OF MAD-COW DISEASE, read one poster held by a high-school student. Global logic may be no match for local emotion, in this case.

© 2008