Midterm election results earlier this month have unleashed a new wave of speculation about the future of U.S. trade policy. Last Thursday, the conservative Heritage Foundation held a panel discussion about what can be learned from the U.S.-Korea Free Trade Agreement (KORUS) and what can the United States do to further reduce barriers to international trade and investment.
The keynote address is by Han Duck-soo, Chairman of the Korea International Trade Association and former Ambassador of the Republic of Korea to the U.S. Han was one of the most prominent advocates of the KORUS agreement in the past and now strongly promotes the idea that South Korea should become an active participant in the Trans-Pacific Partnership trade negotiations.
Since the re-negotiated KORUS entered into effect in March 2012, debate about the agreement’s economic impact has been heated on both sides. Whatever the truth of the matter might eventually turn out to be the case, for now at least one thing is certain — claims by the administration and supporters of the deal that it would increase U.S. goods exports by “$10 billion to $11 billion,” supporting “70,000 American jobs from increased goods exports alone” have not exactly worked out as predicted.
Figures show that in the year after the agreement took effect, exports of U.S. made goods to South Korea fell $3.5 billion, compared with the same period in the previous year, a decline of 8.3 percent. In the same period, imports from South Korea increased $2.3 billion, an increase of 4.0 percent, and the bilateral U.S. trade deficit with South Korea increased $5.8 billion, or almost 40 percent (representing an estimated loss of more than 50,000 U.S. jobs according to the official export-to-job ratio).
Supporters of the KORUS agreement, such as the event’s host former Ambassador Terry Miller, Director, Center for Trade and Economics, dismiss critical assessments of KORUS based solely on the current trade deficit between the U.S. and Korea as short-term thinking and moreover, a misconception resulting from a pernicious “fallacy” which wrongly assumes that imports have a wholly negative impact on jobs. Referring to a previous study into the topic that he co-authored, Miller noted that, counter to received wisdom, he and his colleagues from the American Enterprise Institute had actually found a highly positive correlation between increased imports of manufactured goods from China in the electronics and apparel sectors and U.S. jobs.