Living in protectionist times

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Living in protectionist times

Dark clouds are gathering over the future of our economy after the U.S. Democratic and Republican Parties’ adoption of a party platform stipulating trade protectionism. Following the Democrats’ decision on July 9 to pass a draft of the platform calling for a review of America’s existing trade deals with other countries to protect U.S. workers and create jobs, the Republicans on Monday inserted a clause prioritizing U.S. interest in trade negotiations to its party platforms. What concerns us is that the Republican platform faithfully reflects campaign slogans of Donald Trump, the presumptive Republican presidential candidate in the December election. That’s a dramatic turnaround for the Republican Party, a staunch champion of free trade.

Though the details are yet to be fixed, both parties’ drafts could lead to a review of the Korea-U.S. Free Trade Agreement and the Trans-Pacific Partnership deal if they pass their drafts in the coming weeks. As party platforms serve as the basis of presidential candidates’ commitments, Korea can hardly avoid the protectionist fever, whoever — Trump or Hillary Clinton — becomes next president of America.

Pursuit of self-interest has become a norm in the global economy. According to the World Trade Organization, G-20 member nations took as many as 145 protectionist steps — the fastest increase since the 2008 global economic meltdown — from mid October last year to May. On top of that, a new isolationist movement is sweeping the world economy, not to mention Europe, after the Brexit last month. Uncle Sam’s bold protectionist moves could trigger a global trade war which could revive the specter of the Great Depression, which eventually led to World War II.

Korea with heavy reliance on export must confront the crisis with strong determination. Given the hardships our leading industries — such as automobile and steel — still face in exporting their products amid the global economic slowdown, the government and private sector must aggressively tackle the challenge and cope with the U.S. pressure on us.

The Obama administration has demanded the “rapid trade surplus” Korea has raked in since the FTA deal in 2007 be reduced. Our trade surplus actually increased to $25.8 billion last year from $15.2 billion. But it goes too far to attribute it to the free trade deal alone. In fact, the sharp decrease in our imports also played a big part in the trade surplus. At the same time, the government must ease U.S. pressure by highlighting other factors such as the exchange rates.

Washington also demanded our government relax its regulations on legal, medical and other services areas even after the FTA deal. The government must surmount the trade pressure by fully explaining and meeting Washington’s demands if they are legitimate.

JoongAng Ilbo, July 13, Page 30
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