South Korea approves free trade agreement with US despite deep divisions

South Korea's National Assembly gave the final nod Tuesday to a controversial US free trade agreement that is expected to boost bilateral trade of $88 billion last year.

South Korea opened a new era today of trade with the United States – and protest by liberals and leftists – with approval of a controversial Korea-US Free Trade Agreement by a bitterly divided National Assembly.

The deep disagreements between ruling conservatives and firebrand foes of the government were evident in the contrasting responses of South Korea’ s President Lee Myung-bak and the leader of the main opposition party after the conservatives suddenly forced approval of the deal in Tuesday's surprise vote.

President Lee hailed the agreement as a chance for “moving one step ahead” of competitors. “If  we seize this opportunity and unite our strength,” he said, South Korea can “make a leap" over other countries despite the global economic crisis.

Opposition political leaders, looking ahead to National Assembly elections in April and the election of a new president in December 2012, vowed to fight to kill the agreement, which takes effect on Jan. 1. The conservative Grand National Party, which has 169 of the assembly’s 299 seats, called a snap vote on the FTA after its foes had blocked the vote and rejected President Lee’s personal appeal in a meeting at the assembly.

The showdown in the assembly dramatized deep fissures in South Korean society in an atmosphere in which the wealthy chaebol, or conglomerates, that control the economy have been steadily growing, while millions of people complain of worsening economic realities, including rising unemployment among young people.

The vote also had implications for the US-Korean military alliance since Lee and President Obama had appeared to get along extremely well in Lee’s carefully orchestrated visit to the US last month. Just before he got to Washington the agreement won easy approval in Congress, overcoming earlier misgivings about the potential impact of widening US markets to more South Korean motor vehicles and other products.

Rising threat from US farm imports?

Foes of the agreement in South Korea focused their campaign against it on a provision for sending investor-state disputes to an international arbitration body that they claim favors the United States. South Korean farmers also are incensed by what they see as a rising threat from US farm imports even though the deal does not cover the import of rice, the central staple of the South Korean diet, sold at artificially high prices.

There appeared to be little doubt the newly-approved Korean-US FTA would remain at the core of opposition protests against the government, along with complaints about the US-Korea alliance under which 28,500 US troops remain in the country.

“Until the real – and the perceived – disadvantaged workers and small business owners are convinced that free trade will serve them best in the long term,” says economic consultant Tom Coyner in Seoul, “we may anticipate populist opposition.”

Tear gas and scuffles in parliament

The bitterness surfaced in a ruckus broadcast by South Korean TV networks. As the assembly was convening without prior notice, one opposition member set off a tear-gas grenade and staff members battled security guards to get into the assembly and physically prevent the vote.

Sohn Hak-kyu, leader of the Democratic Party which has 87 assembly seats, denounced the vote as “a coup by the government.” He apologized for failing to block the vote and declared the opening of a campaign to invalidate it. At the same time, his party and minor leftist parties vowed to boycott all assembly sessions.

The agreement appears certain, however, to bring about a huge increase in bilateral trade, which came to $88 billion last year with a balance of $10 billion in Korea's favor.

“Ultimate implementation of the KORUS FTA is certain to be an overall economic and social good for both the US and South Korea,” says Mr. Coyner, reflecting the widely held view of the American Chamber of Commerce and South Korean business groups. “Opening up protected markets is an ultimate necessity.”

The agreement was approved the day before the first anniversary of the North Korean attack on Yeonpyeong Island in the Yellow Sea that killed two South Korean marines and two civilians.

Lee on Wednesday reiterated calls for North Korea to apologize for the attack, which the North said was precipitated by South Korean marines on the island firing cannon. South Korean forces staged an exercise in the area, firing weapons as helicopters flew over waters around the island, just a few miles from North Korea’s southwestern coast.