The Trump administration has made public its intent to seek amendments to the Korea-US Free Trade Agreement. The administration has said that USTR will request a special session under Article 22.2 of the agreement, which will start a 30-day clock requiring both countries’ officials to meet and discuss amendments.
In 2011, the year before KORUS went into effect, President Obama boasted that KORUS would lead to an increase in U.S. exports to South Korea, adding 70,000 additional U.S. jobs. But the trade performance results were very poor in that KORUS has caused the U.S. economy to lose 80,000 jobs, according to information released by the Coalition for a Prosperous America, which represents agricultural, manufacturing, and labor interests.
“The US trade agreement with South Korea enabled their growth-oriented economy to export more of their overproduction and unemployment to the US,” said Michael Stumo, CEO of CPA. “South Korea agreed to include Article 22.2 when negotiating the KORUS agreement. Because the market access results have been dramatically one-sided against the US, amendments should be considered to rebalance trade flows. South Korea should not excessively rely upon US consumer demand for growth. We should be able to grow with their consumer demand during some years.”
The US bilateral trade deficit with South Korea stood at $13.3 billion in 2011 when Congress approved the agreement. In 2016, the US goods trade deficit more than doubled to $27.6 billion.
“Between 2011 and 2016, U.S. exports to South Korea actually declined, despite free traders’ repeated claims and promises that free trade agreements benefit the U.S. with increased exports,” said Jeff Ferry, CPA Research Director. “US negotiators failed to address South Korea’s structural bias, financial manipulation and organizational tactics, such as persistent currency undervaluation and non-tariff barriers, that reduce their domestic consumption and favor production growth.”
“If the US cannot gain concessions allowing it to rebalance trade with South Korea, the administration should consider ending the deal,” added Stumo. “We had better trade performance without it.”