Revival of American protectionism

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Revival of American protectionism

Kim Dong-ho

The author is an editorial writer of the JoongAng Ilbo.

“Buy America” has been baffling Korean citizens, the government and enterprises. Korean-made electric vehicles will not benefit from a tax credit of up to $7,500 for EVs in the U.S. since the U.S. Inflation Reduction Act (IRA) restricts incentives to EVs assembled in North America. The U.S. has been South Korea’s strongest ally since the Korean War. American troops are stationed in Korea for the alliance. Korea has a free trade agreement and recently agreed to join the U.S.-led Indo Pacific Economic Framework to strengthen bilateral alliance. Yet South Korea was pushed aside when it came to national interest.

But it should not be a surprise. The U.S. has always been self-centered. In politics, the act is referred to as isolationism. The principle of not getting involved or interfering with other state affairs has been a recurrent theme in U.S. history. Internationalism kicked in after World War II for exceptional cases when America’s national interests were at stake. The U.S. stayed aloof when Europe came under Nazi aggression. It joined the war after Japan invaded its territory by bombing the Pearl Harbor.

America’s economic and commerce approach is no different. The Jones Act, a section of the Merchant Marine Act of 1920, is a typical example of American trade protectionism. The act sponsored by Wesley Jones, a senator from the state of Washington, demanded that ships using U.S. ports should be made in America and that they should be more than 75 percent owned by Americans, while over 75 percent of the crew should be U.S. citizens. The grounds were national security and economy. The law reasoned that foreign ships could carry weapons and soldiers. It also aimed to boost jobs in America.

A series of economic bills introduced by U.S. President Joe Biden are based on the same reasoning as the Jones Act. The bipartisan support for the laws underscores how deep the U.S. protectionism is rooted. Biden has trotted out the CHIPS and Science Act, the IRA and an executive order on advancing biotechnology and biomanufacturing. At this rate, nothing made outside the U.S. can be sold in America.

The New York Times said that the efficacy of the Jones Act is still being debated by opponents citing adverse effects. For instance, due to a lack of foreign competition, American builders of civilian ships charged higher prices. As a result, the U.S. transportation industry relies more on trucks and trains instead of ships to save cost.

Regardless of the dispute, the U.S. in on a path to divorce free trade, neoliberalism and globalization it touted over the last 30 years in the face of strong challenge from China. With global hegemony at stake, America’s innate penchant for protectionism has kicked in. Its leaders want to have all strategic goods, like chips, batteries, EVs, and bio materials, produced on U.S. turf.

Korea won’t be an exception when it comes to U.S. interests. Choi Joong-kyung — a former minister of knowledge economy who was once considered as chief of staff for President Yoon Suk-yeol — wrote about the cold realities in his book “There is no South Korea in Washington.” According to the book, which is based on his experiences over three years in Washington DC, Korea doesn’t get much attention in Washington. In contrast, Japan discreetly and thoroughly has seeped into Washington through diplomatic skills.

Partisan differences are set aside when it comes to national interest. The closeness of the government and America Inc. is beyond our imagination, according to the book. Biden thanked Samsung Electronics Vice Chairman Lee Jae-yong, Hyundai Motor Group Chairman Chung Eui-sun, and SK Group Chairman Chey Tae-won with beaming smiles for their investments in America. National interest is all that matters to Biden.

We must come to rude awakening. We also must try to produce as many strategic goods as possible at home and back it up with labor and regulatory reforms.
U.S. President Joe Biden signs the Inflation Reduction Act (IRA) in the Senate Dining Room in the White House in Washington, August 16. [AP/YONHAP] 
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