The Rice Solution

The recent failure of free trade agreement talks between the United States and Korea is frustrating. The "sensitive" issues of rice (for the Koreans) and textiles (for the Americans) are harming consumers on both sides of the ocean.

Korea is concerned that by opening up its rice market to imports, that it will effectively make their domestic industry obsolete. The Korean rice industry is practically obsolete and as such requires extensive subsidies to stay afloat along with highly punitive tariffs on imports. The United States feels similarly about its textile industry, although obsolecence isn't the problem in the US, it's the union monopoly on the labor supply that has resulted in anti-competitive wages for textile workers.

The solution is simple. Let the market solve the problem. Let consumers vote with their dollars (or Won.) Allow unrestricted rice imports from the US, but label that rice in the stores as "US Rice" in big bold letters. Label the domestic rice as "Korean Rice." The US rice will of course be dramatically cheaper, but if consumers don't want to lower prices, they would be free to buy the expensive domestic product. The same model could work for textiles. If the citizens of a particular country are truely interested in protecting inefficient industries, then let them pay for it themselves.

I am tired of overpaying for rice. I'm tired of overpaying for everything. Let the markets set the prices and the consumers set the demand.

A letter to Kevin Brady on the Korea-US FTA

The following is the text of a letter I sent to Congressman Kevin Brady of the 8th District of Texas. Brady is a member of the House Ways and Means Committee and serves on the Joint Economic Committee. In the midst of negotiations with Korea regarding a proposed Free Trade Agreement, the US is in a unique position to open markets and facilitate lower costs for consumers.

Dear Mr. Brady:

As an American living in Seoul, Korea, I have a unique vantage point with which to observe the situation regarding the potential for an US-Korea Free Trade Agreement. I would like to provide you with a few key points from my observations in order to facilitate your position on specific areas.

First, the Korean agricultural market needs to be more friendly to US imports. This especially concerns imports of beef and rice. Historically, a punitive quota and tariff system has prevented US beef producers and rice farmers access to the Korean market. Many Koreans consider domestic beef to be a special product, unique from imported beef. As a result, there has been strong resistance to opening beef markets to US producers. Additionally, the highly inefficient and non-competitive Korean rice industry has also been a "sacred cow" to Korean policy makers. This has led to dramatically higher rice prices for consumers. I pay more for rice in Seoul that I would in other countries because of the government protection of farms that lack modernization and the stiff quota and tariff system.

Secondly, the Korean and US automotive market needs liberalization. A removal of tariff on both sides of the ocean would improve the quality of both Korean and American automotive products through enhanced competition as well as providing US auto producers with a larger potential market in which they can compete. Small-scale partnerships such as the GM-Daewoo joint venture are mildly successful, but the Free Trade Agreement should go further, allowing for the full access for US producers to the Korean market as well as lowering import taxes on Korean autos in the US. This will force automakers on both sides to improve quality and lower costs, thus benefiting consumers and ultimately both auto industries.

The current strategic situation with North Korea presents a unique opportunity in trade negotiations that has been previously unexploited. I recommend a strong coupling of US strategic protection initiatives with the approval of the Free Trade Agreement. The Korean side demands better access to the US textile market. The US side wants improved agricultural and industrial access to Korean markets. Both sides should get what they want in terms of market access, but the US should exploit its trump card: assured nuclear umbrella protection in exchange for opening markets.

Without a Free-Trade Agreement, US farmers, ranchers and automakers are spending their tax dollars to protect a Korea that will not allow free access to their markets. Why should the US invest defense capital in protecting markets hostile to their products? In the event of an FTA failure, I would recommend careful study of increased investment in the countries of Central Asia. Their strategic value is equally important and their populations represent a large potential market for American products. The US should take advantage of the defense situation to facilitate open markets. It's through the free market that peace is preserved.

Kindest Regards,

Brian Dear
Seoul, Korea
Registered voter in the 8th Congressional District, Texas
Texas A&M Class of 2002