20101206 south korea free trade 18
South Korean Trade Minister Kim Jong-Hoon holds a diplomatic document during a news conference about the South Korea-US free trade agreement at the foreign ministry in Seoul on December 5, 2010. The agreement lifts tariffs on 95 percent of goods between the countries within five years, in what would be the largest US trade pact since the North American Free Trade Agreement with Canada and Mexico in 1994. The deal still needs ratification by the two countries' legislatures. - 


Bob Moon: What could be the biggest free-trade deal since NAFTA was reached over the weekend by U.S. and South Korean negotiators. The Obama Administration says the plan will increase U.S. exports by billions of dollars and support tens of thousands of U.S. jobs. And it could have implications beyond economics.

Marketplace's Jeff Tyler reports.

Jeff Tyler: The Obama Administration is touting the deal as a good thing for the U.S. economy.

Demetrios Marantis: It's a huge victory. This agreement is all about jobs.

Ambassador Demetrios Marantis is the deputy U.S. trade representative.

Marantis: It will allow us to expand our exports in a way that will create good-paying jobs for American workers throughout the country.

The free-trade agreement would lower tariffs for some U.S. exports, which will be good for auto-makers like Ford. Doug Irwin is a professor of economics at Dartmouth College. He expects Congress will ratify the deal next year. It will be easier, he says, now that Democrats have less influence.

Doug Irwin: The sort of bad after-taste of NAFTA still poisons the political environment. And with Republicans being more supportive of trade in general, this is one reason I think why the Obama Administration has chosen this time to start moving on trade.

South Korea is also expected to ratify the agreement, despite the objections of some politicians and business interests. Marcus Noland is deputy director at the Peterson Institute for International Economics. He says South Korea sees a chance to lock in duty-free access to the U.S. market.

Marcus Noland: From their standpoint, it's less about gaining marginally better terms and more about essentially getting an insurance policy against potential U.S. protectionism in the future.

The deal also has big political implications. Coming after North Korea shelled South Korea -- killing several civilians -- the trade pact signals the enduring alliance between the U.S. and South Korea.

I'm Jeff Tyler for Marketplace.

Follow Jeff Tyler at @JeffMarketplace