U.S. trade report gives FTA with Korea thumbs upThe U.S. trade representative, in its first annual report released under President Donald Trump’s administration, positively evaluated the free trade bilateral agreement with Korea, stressing that it has contributed to lowering the entry of U.S. businesses, particularly small and midsize companies.
The report comes at a time when the Korean export, which struggled since 2015, has been turning around.
According to the USTR’s foreign trade barriers report that was released on Friday, the bilateral trade agreement has not only contributed to the trade improvement of both countries but also has benefited American businesses in expanding to the Korean market.
“The Agreement has brought improvements in the transparency of Korea’s regulatory system, strengthened intellectual property protection, helped dismantle non-tariff barriers to autos and other key U.S. exports and enhanced market access of U.S. exporters of all sizes,” the report by the U.S. trade agency stated.
It continued, “KORUS [Korea-U.S. Free Trade Agreement] provides meaningful market access commitments across virtually all major services sectors, including improved access for telecommunications and financial services. The Agreement also has improved Korea’s business environment for U.S. exporters while strengthening and expanding U.S. ties with a key strategic partner in Asia.”
Since Trump won the U.S. election in an upset against Hillary Clinton in November, the Korean government and the market have been troubled by expectations of a renegotiation of the bilateral trade agreement between the two countries. During his presidential campaign last year, the former real estate mogul has often stressed the need to renegotiate trade deals, including the KORUS FTA and the Trans-Pacific Partnership that he claimed was killing jobs and destroying the middle class.
Until now, the strategy that the Korean government relied on was to convince the new U.S. administration of the benefits that the bilateral trade agreement contributes to both economies.
The recent USTR report showed that in 2016, U.S. goods trade deficits shrank 2.3 percent compared to the previous year to $7.7 billion. Trade between the two countries has increased from $126.5 billion in 2011, which was before the bilateral agreement was ratified, to $146.8 billion in 2015. During the same period, U.S. service exports rose 23.1 percent to $20.5 billion.
However, the USTR noted further expanding in several areas, including the automotive market.
“Increased access to Korea’s automotive market for U.S. auto-makers remains a key priority for the United States,” the USTR report noted.
According to the U.S. trade agency, U.S. automobile exports to Korea increased 280 percent between 2011 and 2016 to $1.6 billion. However, during the same period, the rate of Korean cars being shipped to the U.S. increased 20 times faster.
“The United States will continue to engage with Korea to ensure that these policies are implemented in a fair, transparent and predictable manner, consistent with KORUS,” the report stated.
Korea is still not in the clear, however, as Trump continues to push his administration’s agenda of decreasing U.S. trade deficits. On Friday, he signed two executive orders to crack down on what he calls “foreign cheaters” and reverse the U.S. trade deficit.
“Thousands of factories have been stolen from our country, but these voiceless Americans now have a voice in the White House,” Trump said on Friday. “Under my administration, the theft of American prosperity will end.”
The executive order will allow the U.S. Commerce Department to review, for the next 90 days, trade imbalances with 16 countries, including China, Japan, Germany and Korea. The other executive order is to improve the collection of anti-dumping and countervailing duties owed to the United States.
Meanwhile, Korean exports show a full recovery and have been strengthening as the nation’s outbound shipments in March grew 13.7 percent compared to a year ago to $43.2 billion, largely thanks to strong global demands on computer chips, OLED and cosmetics, according to the Ministry of Trade, Industry and Energy on Saturday.
Although the annual increase has slightly retreated from February’s 20.2 percent growth, this is the third consecutive month since exports have been enjoying double-digit growth.
BY LEE HO-JEONG [email@example.com]