Setback for Obama in Seoul

South Korean President Lee Myung Bak and President Barack Obama met at the G-20 summit in Seoul on Thursday. They were unable to finalize a trade deal. The summit continues today.

Associated Press

South Korean President Lee Myung Bak and President Barack Obama met at the G-20 summit in Seoul on Thursday. They were unable to finalize a trade deal. The summit continues today.

SEOUL, South Korea — Humbled by elections at home, President Barack Obama on Thursday endured a sobering test of his power abroad as well, unable to close a trade deal with South Korea and thrown on the defensive about America's approach to global economic worries.

In Seoul on Thursday, on a stage meant to salute triumph, Obama could not announce a free-trade pact with his ally and host, South Korean President Lee Myung Bak, because negotiators had none to present them. It was an embarrassing setback given Obama's high expectations and his desire to deliver more jobs for frustrated Americans at home.

"We want this to be done in a matter of weeks," Obama said of the deal, insisting that trade chiefs will keep working to get a pact that will survive political tests in both nations. Lee called the hang-ups merely technical, and both leaders said allowing extra time was the smart way to deal with obstacles over U.S. beef and auto exports.

Obama has made free trade a central theme of his 10-day mission to Asia. From Seoul to Washington, business leaders, foreign policy analysts and diplomats were convinced that the president would wrap up the accord during a meeting with Lee. Instead, the two leaders emerged empty-handed, arriving at their joint news conference to say that they had instructed their negotiators to keep at it a little while longer.

"We need to make sure that over the next several weeks, we are crossing all the t's, dotting all the i's, being able to make the case to both the Korean people and the United States population that this is good for both countries," said Obama, who is in Seoul for the G-20 conference. "And if we rush something that then can't garner popular support, that's going to be a problem. We think we can make the case, but we want to make sure that that case is airtight."

It was a concession to Obama dealing with a new and unpredictable Congress. White House officials said that the president would rather suffer a one-day loss of face here than bring home a deal that would be unacceptable on Capitol Hill.

The accord is an update of one signed in 2007 by President George W. Bush. It would represent one of the biggest such pacts since the North American Free Trade Agreement, and analysts say it is an important underpinning for trade deals the administration is seeking, including a regional agreement with Asia-Pacific nations.

Administration officials say the deal would increase exports of U.S. goods by $10 billion annually and support 70,000 jobs in the United States. Although the list of outstanding issues was short, key labor and auto interests and their allies in Congress demanded a fuller opening of South Korea's market. Any deal would require congressional approval.

The Bush-negotiated deal has languished in the Democratic Congress. But at the G-20 conference in Toronto in June, Obama very publicly threw his weight behind it, while calling for technical modifications that would be more favorable to U.S. automakers and industrial unions.

In Toronto, Obama said he wanted the deal "lined up properly" by the time he arrived in Seoul. However, after furious negotiations over the past week — including marathon all-night talks Wednesday night — his self-imposed deadline passed.

If that was not enough, Obama also was forced to confront critics, including leaders of his own Democratic Party, who denounced proposals by the chairmen of a bipartisan commission he assembled to recommend solutions to the nation's burgeoning deficits and debt.

"Before anybody starts shooting down proposals, we need to listen, we need to gather up all the facts, we have to be straight with the American people," the president said in Seoul.

Analysts agree that the president's moment of maximum leverage — his meeting with Lee — has come and gone. Yet, even with Republicans — who are more favorable toward free trade — controlling the House, Obama will still have to deal with a Democratic Senate — as well as a new Republican tea party caucus whose members might be hostile to working with him and are skeptical of trade deals.

He is also under intense pressure from the auto industry. Just last week, the Ford Motor Co., the only one of the big three Detroit automakers to have survived the economic downturn without resorting to a government bailout, placed newspaper advertisements calling the deal unfair.

Obama has made doubling U.S. exports over the next five years a centerpiece of his economic agenda. As he travels through Asia, in the wake of midterm elections that focused on voter discontent with the economy, he is trying both to promote job creation and to repair frayed ties with the U.S. business community. The Korean trade pact is a high priority for the U.S. Chamber of Commerce, whose president, Thomas J. Donohue, has said he can round up the votes to get it approved.

In the three years since Bush negotiated the first free trade pact, other nations, including Australia and Canada, have enacted similar deals, and the chamber makes the case that the United States is falling behind. At the same time, China is negotiating its own free trade pacts in Asia, a source of concern to the Obama administration, which is trying to promote alliances in the region to tamp down China's influence.

"The landscape in Asia has changed," said Tami Overby, vice president for Asia at the Chamber of Commerce, who had been monitoring the talks. "It's much more competitive, so I think the pressure on both sides to get this deal done is greater than ever."

Trade is a tough sell at home, though, especially during difficult economic times in hard-hit manufacturing communities, where workers tend to view trade pacts as drawing U.S. jobs overseas. A survey released Wednesday by the Pew Research Center for the People and the Press found substantial skepticism about trade deals like NAFTA and the policies of the World Trade Organization.

Obama's trip is meant to underscore the steps he has taken to reorient U.S. foreign policy toward Asia, the world's most dynamic economic region. He has made the United States a larger and more consistent presence in regional economic forums, including the Asia-Pacific Economic Cooperation, whose conference he will attend in Japan.

He also has pushed to elevate the G-20 as the main forum for coordinating world economic policy. The change has given three of the nations on his Asian itinerary — including South Korea — a far larger voice on global economic issues.

But the G-20, which began its summit in Seoul on Thursday evening and continued today, has also defined the boundaries of the United States' influence in the aftermath of an economic crisis that many blame on U.S. policy. The group has produced consensus around a set of core principles, but the details of how to implement them have been more elusive.

Information from the New York Times, Associated Press and Washington Post was used in this report.

Setback for Obama in Seoul 11/11/10 [Last modified: Monday, November 7, 2011 1:20pm]

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