Trump wrong on free trade regimeDonald Trump, the presumptive U.S. Republican presidential nominee, pledged to overthrow Washington’s free trade agenda to instead opt for an outright protectionist and nationalist stance.
He vowed to leave the North American Free Trade Agreement and the U.S.-Korea Free Trade Agreement and kill the Trans-Pacific Partnership, a signature trade agenda item of President Barack Obama, if he becomes the new president. He has officially vowed to go nationalist on trade as well as foreign affairs.
He argued that the bilateral trade pact with Korea “doubled our deficit with South Korea and destroyed nearly 100,000 American jobs.” He promised to renegotiate the terms once he is elected or scrap it altogether.
He is not wrong to claim that the U.S. trade deficit has widened since the U.S.-Korea Free Trade Agreement took effect in March 2012. The U.S. trade deficit shot up to $25.8 billion last year from $15.2 billion in 2012.
But trade balances encompass complicated factors from foreign exchange rates to the business cycle and demand. It is foolishly unfair to blame the deficit entirely on a free trade agreement.
A report by the International Trade Commission of the U.S. Department of Commerce also underscored how wrong he is. The independent committee, in a report titled “Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures,” said the U.S.-Korea Free Trade Agreement has contributed to bolstering U.S. exports by $4.8 billion to $5.3 billion.
The report concluded that the free trade agreement with Korea improved the U.S. merchandise trade balance by $15.8 billion last year. Without a free trade agreement with Korea, the U.S. trade deficit would have widened to $41.6 billion, it said.
The British vote to leave the European Union proved what kind of mess a country can get itself into if it is swept up by demagogues feeding bad information to the people. Americans should be wise judges of the reckless rabble-rousing to win votes by finding an easy scapegoat in free trade policies to blame for the trade deficit.
JoongAng Ilbo, July 1, Page 30
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