The US and South Korea broke through a three-year deadlock on Friday to seal a sweeping free-trade agreement (FTA), which US President Barack Obama hoped would renew US leadership in Asia.
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.
After nearly four days of talks in suburban Washington, negotiators cleared a key hurdle by letting the US move more slowly on lifting duties on South Korean cars after US carmakers feared a flood of imports.
The deal still needs ratification by the two countries’ legislatures. Obama won early support from a labor-backed congressman and the Ford Motor Co, former staunch opponents of the deal.
As a senator, Obama was a critic of the deal first negotiated in 2007 under then-US president George W. Bush. But on Friday, Obama said his team reached “the best deal for American workers and corporations,” saying it would create 70,000 US jobs through new exports — an estimate disputed by critics.
“It deepens the strong alliance between the United States and the Republic of Korea and reinforces American leadership in the Asia Pacific,” Obama said in a statement.
In Seoul, South Korean President Lee Myung-bak said the agreement would bring “huge benefit” to South Korea, which has embraced free trade deals as a strategy to promote an economy long in the shadow of economic giants Japan and China.
“When the FTA takes effect, South Korea will be the first country in the world that will have signed free trade deals with the United States, the EU and ASEAN and India,” he added.
Under the renegotiated agreement, the US will be allowed to keep its 2.5 percent tariff for five years, while South Korea would immediately cut its tariff in half to 4 percent. Both sides would eliminate tariffs after five years.
US officials said Seoul would also ease car safety and environmental standards that US automakers contend are a thinly disguised way to stifle foreign competitors through arbitrary requirements.
The revised agreement would let each US automaker export 25,000 cars per year that meet only US safety requirements — four times the current level.
Mitch McConnell, the top Republican senator, and Representative Sandy Levin, a Democrat from the auto manufacturing state of Michigan who is often critical of free trade deals, came out in support of the new agreement.