An opportunity missed

By Andray Abrahamian

The U.S. has missed a chance for inducing better relations with North Korea through the Korea-U.S. free trade agreement (FTA), which was ratified in October by Congress and looks to be similarly passed in South Korea’s National Assembly this month.

Gaeseong, a little over an hour from Seoul by car, is just over the border, in North Korea. An inter-Korean industrial park was set up there in 2002 during the halcyon days of the Sunshine Policy. Relations between the Koreas were better than ever and the park provided Southern companies with cheap labor and the North with hard currency earnings.

Gaeseong’s political, economic and symbolic value is high for both Koreas and has managed to survive both the sinking of the Cheonan and the bombing of Yeonpyeong Island last year.

The FTA was signed three years before the annus horribilis for inter-Korean relations in 2010. This first version of the FTA was deliberately vague on the issue of inclusion of products made in the Gaeseong Industrial Complex.

In short, if the question was “Will goods made in North Korea be included?” the answer was a definite “maybe.” This was a clever “maybe.” The United States has precious few means of influencing North Korean policymakers and the flexibility in the agreement would have provided an additional point from which to offer something of value to its longtime enemy, in return for concessions or other perceived good behavior.

Last year, however, under pressure from textile and auto industries, Washington talked Seoul into a renegotiation of the FTA. The 2010 version and the deliberations in Congress that took place this year largely cleared up the vagueness on Gaeseong, making it explicit that sanctions supersede the FTA. This shut down the possibility of Gaeseong-made goods even being exported to the U.S., much less under a tariff/tax free regime.

As relations between North Korea and the outside world look set to improve over the coming year, the United States needs all the avenues it can get for incentivizing behaviors it supports, along with disincentivizing behaviors it opposes. Following Lee Myung-bak’s all-or-nothing approach has been a nonstarter and has contributed to North Korea’s increasing dependence on China for trade.

In the long term, this harms South Korea’s interests, as Chinese firms gobble up North Korean resources with long-term contracts. It has also in the short-term limited U.S. options on North Korea, as Obama has been unwilling get too far ahead of Lee’s positions.

This passivity is understandable, however. Obama’s government was from the start disinclined to expend political capital on the thorny issue of North Korea. They rightfully saw many ways for it to go badly and few ways for it to go well.

There was also little energy to focus on North Korea while trying to craft endgames in Iraq and Afghanistan, managing a tenuous global economic recovery and then navigating the unexpected political changes in the Middle East.

Domestic issues such as healthcare and jobs have consumed Obama’s political capital as well. Understandably, pro-FTA politicians in Washington, especially Democrats, who were considering passing a bill that could be construed as threatening jobs, did not want to add the cheap labor of an export-processing zone into the mix.

Domestic concerns almost always trump international ones in politics, of course, and arguments for better relations with North Korea resonate little with American voters. This variety of constraints has effectively removed the possibility of the FTA providing a mechanism for engaging North Korea.

In South Korea, the FTA will probably pass with a little wrangling, but without any of the mass mobilizations by citizen groups that greeted the initial negotiations and agreement between then-Presidents George W. Bush and Roh Moo-hyun.

South Korean lawmakers will grandstand, theatrically block doorways and maybe even throw punches, but with the Grand National Party apparently willing to use its majority to push the bill through, the FTA will almost certainly go into effect in January 2012.

It’s pretty much a done deal, but it could have done more.

Andray Abrahamian teaches international relations at the University of Ulsan. He can be reached at andraybaksa@gmail.com.