Category Archives: Trade

There were more street protests in Seoul on Sunday over U.S. beef. The public is scared out of their minds that they’ll get mad cow disease. The domestic beef industry doesn’t like having to face competition. President Lee Myung-bak’s approval rating is lower than President Bush’s. The pending U.S.-Korea free trade agreement is under fire.

Will it pass? The Wall Street Journal Asia, in a standout editorial today, thinks so. The beef outcry is a temporary phenomenon, they believe.

“It’s worth noting that the opposition party hasn’t gained any ground at Mr. Lee’s expense, a sign that the public protests may mask broader support for the free-trade agreement.”

Let’s hope they’re right.

It looks like the impasse on the U.S.-South Korea trade agreement will get worse before it gets better. A mad cow disease scare is reaching epidemic proportions among the Korean public. The beef scare is stalling passage of the U.S.-Korea free trade agreement.

President Lee Myung-Bak has been under heavy fire ever since he decided to lift the 2003 ban on importing U.S. beef. The public outcry climaxed in a 100,000-strong protest over the weekend in Seoul.

Koreans are terrified that eating U.S. beef will give them mad cow disease. They shouldn’t be. I noted in an earlier post that approximately one in 35 million cows slaughtered in the U.S. have mad cow disease. Those odds are negligible; our food supply is safe.

If people still want to be scared, that is their right. No one should force them to buy U.S. beef. But why do they want to take that option away from people who don’t frighten so easily? Especially when $20 billion of increased trade is at stake?

Barack Obama says he would keep in place the 47-year old Cuban trade embargo if elected President. CNN says Obama views the trade restrictions as “leverage to push for democratic change on the island.”

Yes, those sanctions have been awfully effective. Just look at how much more democratic Cuba has become since we began the embargo.

(Pardon the sarcasm.)

Right now South Korea is working toward a free trade agreement with the U.S. It could increase trade between the two nations by $20 billion. Unfortunately, a mad cow disease scare could prevent that from happening.

The hysteria started when the first U.S. case of mad cow disease was detected in 2003. To put it in context, mad cow afflicted a single cow out of the more than 35 million slaughtered that year. That 1-in-35-million ratio has roughly held since then. U.S. beef is safe.

But South Koreans don’t seem to think so. U.S. beef was immediately banned. After quietly simmering in the background, the embargo has been cautiously eased in fits and starts. Last month, President Lee Myung-Bak proposed lifting most restrictions on importing U.S. beef. Politically, the timing could not have been worse. The Korean media has been in hysterics, adding tension to already fragile negotiations.

Korea’s domestic beef lobby has been more than happy to stoke the flames of fear. “Our competitor’s product will kill you,” seems to be their message, with the implied “only buy from us.” People believe them, too.

This is a shame. The benefits to all Koreans from freer trade far outweigh the benefits to a single industry from preferential treatment.

Truth be told, both sides are to blame for the U.S.-Korea trade impasse. Here in the U.S., the tide has also been turning protectionist. The arguments that American liberalization opponents are using are about as sound as their Korean equivalents.

One news outlet said that 94% of Koreans carry a special gene that makes them more susceptible to mad cow disease. That claim has since been exposed as fraudulent. In America, people like Lou Dobbs are claiming that trade costs jobs; but America has gained 26 million net jobs since NAFTA was passed. Wages are higher, too.

Empirical data and economic theory are both on the side of free trade. The people negotiating the U.S.-Korea trade agreement would do well to remember that, even if both the media and public sentiment are against them.