CQ TODAY ONLINE NEWS
Oct. 11, 2011 – 10:58 p.m.
Korea Trade Pact Boasts Financial Industry Backers
By Joseph J. Schatz, CQ Staff
When President Obama touts the U.S.-South Korea trade deal at a Detroit-area auto plant Oct. 14, expect him to highlight its benefits for U.S. workers, rather than its profit-making potential for Wall Street.
Yet some of the agreement’s loudest cheerleaders are U.S. financial services companies, including big banks and insurers eager for access to the South Korean market.
While congressional trade debate has focused on automakers and cattle ranchers, Citigroup Inc. and Goldman Sachs are both represented on the steering committee of the U.S.-Korea FTA Business Coalition, an industry alliance promoting the trade deal. The agreement, which President George W. Bush signed in 2006, would allow U.S. banks to fully own Korean institutions, provide a gateway to business in other Asian countries and break down barriers to investment and cross-border transactions.
Trade deals with Colombia and Panama are also under consideration this week. All three are expected to clear in the Senate by week’s end.
But the South Korea pact is the most consequential. Citigroup has long called the Korea agreement the “gold standard” when it comes to trade agreements dealing with banking regulations. The deal will likely be viewed as a template as the administration negotiates a Pacific Rim trade agreement in the coming months.
The Korea deal is also expected to be a boon to other companies, including pharmaceutical giant Pfizer Inc., in the so-called services sector, which has become the biggest segment of the American economy. U.S. Trade Representative
Critics charge that the trade agreements will leave both U.S. and Korean financial regulations open to new challenges, as both countries contend with the inevitable proliferation of financial innovation that will follow the loosening of trade restrictions. The U.S. trade representative’s office disputes that conclusion, noting that the agreement allows the U.S. government plenty of flexibility to protect U.S. regulations.
Still, some of the groups fueling the “Occupy Wall Street” rallies have taken note. The Minnesota Fair Trade Coalition told its members in a blog posting last week to take “fair trade” pamphlets with them to New York and elsewhere. “Does anyone really want to support financial services policies celebrated by an administration and company that wrecked the economy?” the group asked.