Don’t blame Korea for automaker woes

SEOUL, S. Korea – Barack Obama’s argument against signing a pending FTA with Korea doesn’t hold water, and neither does his bailout of America’s auto industry. And the two are related.

When he won the election, one of the first things pundits here began to talk about was his stand on the agreement that Seoul has been pushing hard for in recent weeks. While South Korean President Lee Myung-bak all but staked his political career on passage of the deal, Obama has often come out against it, citing an imbalance in auto-trade between the two nations.

Yes, there’s a trade imbalance. There are far more Hyundais on American roads than there are Chevy’s on Korean ones. An article in USA Today even took note that more American drivers are choosing Hyundais over Mercedes and Lexuses! But it isn’t because of trade barriers.

Everyone I’ve talked to here, whether they are for or against the FTA, says the main reason Koreans don’t drive American cars is because they’re big and use way too much gas. It’s worthwhile here to point out that Korean drivers pay and have been paying far more for fuel than their American counterparts.

In his meeting at the White House on Monday, Obama called on George Bush to divert a portion of bailout funding to aid America’s big-three automakers, Ford, Chrysler and GM. Bush apparently said he’d only agree to that if Obama agreed to sign the pending FTA deals.

Meanwhile, a report in the International Herald Tribune pointed out that if the auto firms go under it will cost the U.S. an estimated 3 million jobs. It also noted that Obama would tie any government aid they receive to requirements that American automakers step-up efforts to produce greener, more fuel-efficient cars.

That’s hopeful, but you still have to wonder. In the long term, is protecting America’s auto industry from competition really going to benefit either the companies themselves or the nation as a whole? Is government protection going to provide any kind of incentive for the manufacturers to improve their products? It didn’t work in the past with Chrysler. And no matter how many trade barriers South Korea lowers, as it stands now, Koreans are still not going to be buying made in America.

Just as an aside, the real losers from free trade agreement would be South Korea’s farmers. Unlike America’s auto industry, which could have long ago taken steps to keep up with changing demands, Korea’s farmers have little or no means of battling the flood of cheaper imports that are sure to enter the country once the FTA is signed. There’s little land here, and has been even less incentive from the government or society. No one – no one – wants to be a farmer in Korea.

There’s been some talk the government here would help offset the negative side effects of an FTA on Korea’s farmers with a set of financial aid measures. There are also recent reports that the government is seeking to boost the nation’s food industry in the coming years, perhaps even departing from traditional, family farms in favor of larger agro-businesses.

Which makes me wonder, if the government here can find a way to modernize its centuries-old agricultural sector, why is the government there essentially paying its automakers not too?