The Office of the U.S. Trade Representative on March 15 issued a fact sheet highlighting the many benefits that the U.S.-Korea Free Trade Agreement continues to provide four years after it entered into force to American businesses, workers and farmers. By contrast, the Coalition for a Prosperous America claimed that the agreement has significantly worsened the bilateral trade deficit with Korea.
The USTR fact sheet indicates that U.S. manufacturing exports to Korea went up by 8.4 percent from $34.4 billion in 2011 to $37.3 billion in 2015, with shipments of passenger vehicles (up by 207.9 percent to $1,287 million) and pharmaceuticals (up by 48.3 percent to $934 million) experiencing brisk growth and shipments of machinery achieving a more moderate 13.1 percent gain to $6.9 billion. In addition, sales of “Detroit 3” cars in Korea rose 21 percent during 2014-15, outpacing both the overall growth of U.S. exports to Korea and worldwide exports of U.S. passenger vehicles.
Also doing well during 2011/15 were a range of agricultural and food products, including beef (up by 18.1 percent to $810 million), lemons (up by 233.3 percent to $30 million), shelled almonds (up by 143.2 percent to $180 million), fresh cheese (up by 390.0 percent to $147 million), cherries (up by 172.5 percent to $109 million) and wine and beer (up by 83.3 percent to $33 million). Exports of dairy products grew by nearly 37 percent from 2011, while shipments of citrus fruit advanced 25 percent.
U.S. services exports to Korea have also done well in recent years, growing by 34.5 percent from $16.7 billion in 2011 to an estimated $22.4 billion in 2015. This rate of growth nearly tripled the overall 13.1 percent growth of U.S. services exports to the world. USTR observes that the agreement has provided greater access to Korea’s market for U.S. express delivery services and now allows U.S. investors to wholly own Korean telecommunications operators and some broadcast service providers.
The agreement has also strengthened intellectual property protection, including by lengthening copyright terms and enhancing enforcement against violations of U.S. copyrights, patents and trademarks. The fact sheet indicates that intellectual property revenue from Korea has increased markedly as a result, from $4.5 billion in 2011 to $6.1 billion in 2014.
On the other hand, USTR acknowledges that a slowdown in economic growth in Korea partly due to the slowdown in the Chinese economy is driving down demand for imports across the board, including imports from the U.S. Despite these headwinds, combined U.S. goods and services exports to Korea still managed to increase by 1.2 percent in 2015, compared to a 5.1 percent drop in U.S. goods and services exports to the world.
The Coalition for a Prosperous America believes USTR is using a misleading method of cherry picking small slices of data to claim the agreement has had a positive impact, however. According to this group, the fact that the U.S. bilateral deficit with Korea has ballooned from $14.7 billion in 2011 to $28.4 billion in 2015 demonstrates that “the current Trans-Pacific Partnership promises by the Obama Administration, which are recycled from the KORUS agreement, are not credible.”