Clinton’s potential trade policiesThe 2016 U.S. presidential election has been quite unusual, and in fact, many would say unprecedented. As Hillary Clinton emerges as the presumptive Democratic front-runner, it is becoming increasingly likely that Clinton will become the 45th president of the United States. As such, it is a good time to examine her trade policies and their implications for Korea.
That Clinton is well-versed on international trade issues and has been a centrist both as U.S. senator and as secretary of state is widely known. As senator, she supported U.S. free trade agreements with Australia, Morocco, Oman, Chile and Singapore, although she opposed the Central American Free Trade Agreement in 2005 out of concerns about its labor provisions.
As secretary of state, Clinton underscored the strategic importance of a long-term, robust focus on Asia, offering strong support for the Korea-U.S. Free Trade Agreement (KORUS). Similarly, she praised the potential of a Trans-Pacific Partnership (TPP) deal, promoting it as a possible “gold standard” agreement that could define trade in the 21st century.
However, Clinton is by no means an ideological free trader. As a Democrat, she is, and needs to be, highly sensitive to the politics surrounding free trade issues in a party known for eschewing free trade agreements in favor of the domestic workforce. In particular, her main Democratic contender, Senator Bernie Sanders, has been steadfast in his opposition to U.S. trade agreements. Strong support for Sanders from the far left, together with the presumptive Republican nominee Donald Trump’s tough stance on trade, will likely pressure Clinton into pushing for strong trade enforcement in the general election.
In fact, Clinton has already announced last year that the TPP in its current form does not meet her standards, even though she initially supported negotiation of the agreement as secretary of state. She has specifically expressed concerns over a number of TPP provisions, such as rules of origin for automobiles, access to medicine and currency manipulation. She has also criticized the lack of financial assistance, such as educational resource programs for U.S. workers that would allow them to compete effectively in global markets, as well as the lack of potential for U.S. job creation in the agreement.
Despite her concerns, Clinton is keenly aware of the strategic importance of the TPP to the United States in augmenting U.S. leadership in the region vis-à-vis China, as well as in securing the potential economic benefits and synergies afforded by a significant TPP community.
Therefore, if the agreement has not passed before she becomes president, she is unlikely to abandon efforts to ratify the agreement altogether. Rather, she may, as president, seek to renegotiate the current TPP agreement to ensure that it meets her “three-part test” of creating jobs, raising wages and improving national security, which she has been advocating throughout her campaign.
As Korea is aware, this is not unprecedented; the North American Free Trade Agreement and KORUS were both renegotiated after the initial agreement. But with 11 other countries participating this time in the proposal, it could prove extremely difficult, if not virtually impossible, to change some of the core TPP provisions Clinton has cited as problematic.
For Korea, a Clinton presidency would likely mean that the United States and Korea will continue to maintain strong relations across the board. Clinton’s positive engagement with Korea as secretary of state demonstrates that she understands Korea and will remain cognizant of Korea’s strategic and economic importance. Clinton also strongly supported KORUS, and there is no indication that her commitment to the agreement will be weakened.
As Korea knows, however, over the past few years, there have been concerns in the U.S. Congress regarding Korea’s record on its enforcement of certain KORUS sectors, such as pharmaceuticals, software piracy, data flows for financial services and legal services liberalizations. In March of this year, Senate Finance Committee Chairman Orrin Hatch, a Republican, publicly expressed his view that Korea has not fulfilled its commitments under KORUS and asked Korea to resolve these implementation and compliance issues.
To compound the matter, there are growing concerns over the size of the U.S. trade deficit with Korea, which has more than doubled in just four years, from $13 billion in 2011 to $28 billion in 2015. Many in the United States believe that KORUS is hurting the U.S. economy and want this imbalance rectified.
Clinton’s track record shows that she supports trade agreements but believes that they should be fair. In this regard, she has stated that she would be willing to pursue strong trade enforcement measures to ensure that trade agreements provide a level playing field. In fact, during the campaign, Clinton advocated for the assignment of a “trade prosecutor” and for tripling the number of trade enforcement officers to enforce trade laws and agreements.
Korea needs to be mindful of Clinton’s stance on trade, the potentially brewing controversy over KORUS and general U.S. concerns over the trade balance with Korea, and seek to find ways to proactively defuse potential friction with the United States. One immediate step that Korea could consider taking is to try to resolve outstanding U.S. concerns regarding the implementation of KORUS, which will also operate to be of help to Korea’s efforts to join the TPP.
*The author is a senior partner at the law firm of Arnold & Porter in Washington, D.C.