Washington ~ The Trump administration has made public its intent to seek amendments to the Korea-US Free Trade Agreement known as the KORUS FTA. The administration has said that USTR will request a "special session" under Article 22.2 of the agreement, which will start a 30-day clock requiring both countries' officials to meet and discuss amendments.
“We applaud and support the President's effort to renegotiate and get a better deal for the American worker and American producers on trade,” said Dan DiMicco, Chairman of CPA.
“The US trade agreement with South Korea enabled their growth-oriented economy to export more of their overproduction and unemployment to the US,” said Michael Stumo, CEO of CPA. “South Korea agreed to include Article 22.2 when negotiating the KORUS agreement. Because the market access results have been dramatically one-sided against the US, amendments should be considered to rebalance trade flows. South Korea should not excessively rely upon US consumer demand for growth. We should be able to grow with their consumer demand during some years.”
In 2011, the year before KORUS went into effect, President Obama boasted that KORUS would lead to an increase in U.S. exports to South Korea, adding 70,000 additional U.S. jobs. But the trade performance results were very poor in that KORUS has caused the U.S. economy to lose 80,000 jobs.
“Between 2011 and 2016, U.S. exports to South Korea actually declined, despite free traders’ repeated claims and promises that free trade agreements benefit the U.S. with increased exports,” said Jeff Ferry, CPA Research Director. “US negotiators failed to address South Korea’s structural bias, financial manipulation and organizational tactics, such as persistent currency undervaluation and non-tariff barriers, that reduce their domestic consumption and favor production growth. It’s hard to imagine how this trade agreement could have turned out any worse for the U.S.”
The U.S. bilateral trade deficit with South Korea was $13.3 billion in 2011 when the agreement was approved by Congress. Fast forwarding to 2016, our goods trade deficit more than doubled to $27.6 billion.
“If the US cannot gain concessions allowing it to rebalance trade with South Korea, the administration should consider ending the deal," continued Stumo. "We had better trade performance without it. US laws and courts should be the priority to govern trade and to set the conditions of product entry into our consumer market. International trade deals should be limited to topical areas where US law is clearly insufficient to advance our national interests.”
About CPA: The Coalition for a Prosperous America is the nation’s premier organization working on the intersection of trade, jobs, tax and economic growth. We represent the interests of 2.7 million households through our agricultural, manufacturing and labor members.
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