’GM to Determine Fate of S. Korea-US FTA’
By Yoon Ja-young
How the U.S. President Obama administration deals with General Motors will determine the fate of the free trade agreement (FTA) between Korea and the United States, the former first deputy managing director of the International Monetary Fund (IMF) said.
``What happens with GM is very important. If the auto industry gets back, President Obama would push the FTA,’’ said Anne Krueger, professor of international economics at Johns Hopkins University at a lecture organized by the Institute for Global Economics, Wednesday.
Krueger served as the first deputy managing director at the IMF from 2001 to 2006.
The economist said the honeymoon between the U.S. Congress and the new U.S. President Obama was short, adding that Congressional concerns over the auto industry are a very sensitive issue as it affects many jobs in the United States.
Krueger added that Korea should work for uniform trade treatment, as in the World Trade Organization, instead of solely focusing on bilateral trade agreements. She also said that protectionist retaliation caused huge drops in international trade and made the depression last longer than it should have in the 1930s.
She said that the low interest rate was behind the global crisis. ``For the financial sector searching for yields, the only way was to invest in riskier things,’’ the economist explained.
She said there is some evidence that things are starting to look a little better in the stock and housing markets. She said that they will not immediately lead to boosting aggregate demand in the United States and that unemployment would continue.
Regarding the reallocation of the IMF quota, she said European countries appear to have too large a share.