Differing Views on Impact of U.S.-Korea FTA After One Year
The U.S. and South Korea recently marked the one-year anniversary of the implementation of their bilateral free trade agreement, but views on the economic effects of the pact are mixed.
President Obama said in a joint press conference with Korean President Park Geun-Hye May 7 that the FTA “is already yielding benefits for both our countries.” The U.S. is selling “more manufactured goods, more services, more agricultural products” to Korea and its automobile exports in particular are up nearly 50%. He asserted that the FTA (once fully implemented) “will boost U.S. exports by some $10 billion and support tens of thousands of American jobs” as well as help Korea “in expanding their economy and moving it further and further up the value chain.”
A fact sheet from the Office of the U.S. Trade Representative offered additional details. U.S. manufacturing exports to Korea were up 1.3% in 2012 to $34.8 billion, USTR said, including increases of 24% for transportation equipment, 48% for passenger vehicles and 34% for aircraft and parts. With respect to agriculture the U.S. has seen export gains of 48% for soybeans, 38% for wheat, 130% for orange juice , 128% for grape juice, 57% for wine and 46% for fresh fruits. U.S. private-sector services exports have experienced “robust growth” of 8.7%, including 23% for royalties and license receipts and 11% for travel services. In addition, 12 U.S. law firms have received approval to open offices in Korea and U.S. service providers in sectors such as telecommunications, e-commerce and international express delivery services are seeing benefits.
However, the non-governmental organization Public Citizen asserted that over the past year U.S. goods exports to Korea have dropped 10% while imports have climbed 2%, resulting in a 37% increase in the U.S. trade deficit with Korea that “indicates the loss of tens of thousands of U.S. jobs.” A statement from the group said the U.S. has seen declines in exports of beef (8%), pork (24%) and poultry (41%) and that imports of Korean cars are up 15%, “driving a 16% increase in the U.S. trade deficit with Korea in autos and auto parts.” The group cites the undervaluation of Korea’s currency as “one plausible explanation for the drop in U.S. exports to Korea since the FTA went into effect.”