Trade association urges Korea to ready for Trump impact
KITA said while it is too early to tell whether Trump will actually carry out his campaign promises, it is certain that global trade dynamics shift drastically under the new U.S. president’s “America First” policy.
“The issue with Trump’s protectionist trade policy is that it will create a ripple effect, forcing other countries to assume a similar stance,” explained Je Hyun-jung, a deputy general manager at the international trade cooperation department in KITA. “International trade as a whole may be impacted which is not good news for countries such as Korea whose economy depends heavily on exports.”
The deputy general manager’s explanation comes after the KITA had projected that next year’s exports will grow by as much as 3.9 percent compared to 2016. Institutions across the nation concurred. Korea Economic Research Institute, a local think tank, forecast that exports will grow by 2.9 percent this year. Exports had just turned around from a decline of nearly two years in November 2016.
Despite such rosy projections, however, KITA remains wary of the impact the Trump administration could have and said it will stay vigilant once he is inaugurated on Friday. “We will have to keep our eyes on the role the new trade agency will play,” KITA said in its report.
Je elaborated and told reporters on Tuesday that the role of White House National Trade Council, a new body that will be established under the Trump administration to advise the president on coordinating trade negotiations, has to be monitored closely.
“At this point, we are not sure how the three government bodies - National Trade Council, Department of Commerce and U.S. Trade Representative - will be operated by the incoming president,” said Je.
The increase of antidumping investigation cases by the U.S. authorities is another hint for changes in global trade dynamics.
“Historical data show that America uses antidumping measures when it faces an economic slump,” said Je. “If you look at 1982, for instance, which is right after the oil shock, America investigated 178 different possible dumping cases, 146 more in comparison to 1981. This pattern can be spotted repeatedly throughout the history. Each time, antidumping measures were utilized to implement protectionist trade policy of the United States.”
In accordance with Je’s analysis, the number of cases in which Korean companies were the targets of the investigations has also risen in recent years. While only one case targeted Korea in 2009, the U.S. Department of Commerce probed seven cases involving Korean companies in 2015 and six in 2016. Just this month, Samsung Electronics and LG Electronics were slapped with antidumping duties on their China-made washing machines sold in the United States. Still, experts were careful about making any assumptions.
“Trump made remarks about protectionist policy but all we can do right now is speculate,” said Lee Jeong-yeon, a professor of international studies at Yonsei University and a former World Bank researcher. “The new administration may try to renegotiate terms on the free trade agreement between Korea and the United States but there is so much that the United States can do before the World Trade Organization or other countries retaliate.”
“It may as well be just a political gesture and as long as there is gain for the United States, that might be sufficient enough,” the professor added.
“The Pandora’s box is yet to be opened,” Je said. “We will closely watch for the situation in the United States for the first 100 days or so after Trump is officially inaugurated.”
BY CHOI HYUNG-JO [firstname.lastname@example.org]