More than three years since the S Korea-US FTA came into effect, the results are mixed. American exports rose to a record $44.5b last year, up 6.8 per cent from 2013. Yet the US trade deficit with S Korea is at record levels, too

Korean trade pact a reality lesson

As negotiators try to wrap up the ambitious Trans-Pacific Partnership, a similar trade agreement with South Korea offers lessons on the benefits and frustrations with managed trade, reports WTO News Today on Saturday.
More than three years since the South Korea-United States Free Trade Agreement came into effect, the results are mixed. American exports rose to a record $44.5billion last year, up 6.8 per cent from 2013. Yet the US trade deficit with Seoul is at record levels, too.
Although South Korea is Washington state’s sixth-largest trading partner, exports to that nation have actually fallen during the past three years even as they have risen dramatically overall.
KORUS, as the pact is known, has vigorous defenders as well as detractors. But it offers a cautionary example of what such deals can accomplish as negotiators try to conclude the biggest of all, the Trans-Pacific Partnership.
Like TPP and NAFTA, KORUS is not actually “free trade” but a managed trade agreement. Proponents hope to achieve the same good outcome, lowering barriers, but these deals are complex, dense and produce more losers than advocates wish to acknowledge.
The landscape has come a long way from true free trade, one of the goals of American foreign policy after World War II. US leaders believed the beggar-thy-neighbor policies of the prewar years had helped give rise to extremism and war. Back then, America was also the largest exporter and manufacturing nation.
These aspirations became real through successive rounds of the General Agreement on Tariffs and Trade. Yet another acronym: GATT. Starting with 23 nations in 1947, the process sought two large goals: lowering tariffs and having every participant play by the same rules. By the Uruguay Round in 1994, GATT had 123 signatories and laid the groundwork for today’s World Trade Organisation.
GATT was never perfect. Compromises were required, including allowing war-devastated Japan and South Korea, to use tariffs, subsidies and other self-interested measures to build their economies into powerhouses. American agriculture kept its own privileges, too. But GATT’s goals and accomplishments were relatively transparent and, as its framers hoped, provided one of the foundations of this long stretch of peace among major nations. As the economic benefits of GATT began to exhaust themselves and with the rise of the European Union, the other Washington turned to managed trade agreements. The first was with Canada, then NAFTA, including Mexico. The United States now has these pacts in place with 20 nations.
To their advocates (and I backed NAFTA in the early 1990s), these agreements recognise the reality of more complicated globalisation, maximising trade benefits and creating jobs, although some disruption is inevitable.
They are meant to soothe multilateral disputes and address advanced issues such as services and intellectual-property protection. And they are allowed under the World Trade Organisation.
These agreements, suppor-ted by both Republican and Democratic administrations, are the foundation of so-called neoliberalism.
Critics see the deals as benefiting global corporations much more than workers, and causing significant job destruction and environmental problems.
Which brings us back to KORUS. In a prepared statement, the office of US Trade Representative Michael Froman said, “The US-Korea trade and investment relationship is substantially larger and stronger than in 2011, and KORUS has contributed to a strong and successful 2014 for American exporters.”
It pointed to four rounds of tariff reductions and eliminations, better intellectual-property protection, more transparency in Seoul’s regulatory system and improved access for services exports.
Froman’s office states, “Overall, US-Korea goods and services trade has risen from $126.5 billion in 2011 to $145.2 billion in 2014.”
Agriculture makes up the majority of Washington goods sold to South Korea, and cherry exports have risen from $40 million in 2011 to $116 million last year.

More than three years since the S Korea-US FTA came into effect, the results are mixed. American exports rose to a record $44.5b last year, up 6.8 per cent from 2013. Yet the US trade deficit with S Korea is at record levels, too

Korean trade pact a reality lesson

As negotiators try to wrap up the ambitious Trans-Pacific Partnership, a similar trade agreement with South Korea offers lessons on the benefits and frustrations with managed trade, reports WTO News Today on Saturday. More than three years since the South Korea-United States Free Trade Agreement came into effect, the results are mixed. American exports rose to a record $44.5billion last year, up 6.8 per cent from 2013. Yet the US trade deficit with Seoul is at record levels, too. Although South Korea is Washington states sixth-largest trading partner, exports to that nation have actually fallen during the past three years even as they have risen dramatically overall. KORUS, as the pact is known, has vigorous defenders as well as detractors. But it offers a cautionary example of what such deals can accomplish as negotiators try to conclude the biggest of all, the Trans-Pacific Partnership. Like TPP and NAFTA, KORUS is not actually free trade but a managed trade agreement. Proponents hope to achieve the same good outcome, lowering barriers, but these deals are complex, dense and produce more losers than advocates wish to acknowledge. The landscape has come a long way from true free trade, one of the goals of American foreign policy after World War II. US leaders believed the beggar-thy-neighbor policies of the prewar years had helped give rise to extremism and war. Back then, America was also the largest exporter and manufacturing nation. These aspirations became real through successive rounds of the General Agreement on Tariffs and Trade. Yet another acronym: GATT. Starting with 23 nations in 1947, the process sought two large goals: lowering tariffs and having every participant play by the same rules. By the Uruguay Round in 1994, GATT had 123 signatories and laid the groundwork for todays World Trade Organisation. GATT was never perfect. Compromises were required, including allowing war-devastated Japan and South Korea, to use tariffs, subsidies and other self-interested measures to build their economies into powerhouses. American agriculture kept its own privileges, too. But GATTs goals and accomplishments were relatively transparent and, as its framers hoped, provided one of the foundations of this long stretch of peace among major nations. As the economic benefits of GATT began to exhaust themselves and with the rise of the European Union, the other Washington turned to managed trade agreements. The first was with Canada, then NAFTA, including Mexico. The United States now has these pacts in place with 20 nations. To their advocates (and I backed NAFTA in the early 1990s), these agreements recognise the reality of more complicated globalisation, maximising trade benefits and creating jobs, although some disruption is inevitable. They are meant to soothe multilateral disputes and address advanced issues such as services and intellectual-property protection. And they are allowed under the World Trade Organisation. These agreements, suppor-ted by both Republican and Democratic administrations, are the foundation of so-called neoliberalism. Critics see the deals as benefiting global corporations much more than workers, and causing significant job destruction and environmental problems. Which brings us back to KORUS. In a prepared statement, the office of US Trade Representative Michael Froman said, The US-Korea trade and investment relationship is substantially larger and stronger than in 2011, and KORUS has contributed to a strong and successful 2014 for American exporters. It pointed to four rounds of tariff reductions and eliminations, better intellectual-property protection, more transparency in Seouls regulatory system and improved access for services exports. Fromans office states, Overall, US-Korea goods and services trade has risen from $126.5 billion in 2011 to $145.2 billion in 2014. Agriculture makes up the majority of Washington goods sold to South Korea, and cherry exports have risen from $40 million in 2011 to $116 million last year.