Warren raises questions about widening trade deficit with South Korea.

[pa28]

http://thehill.com/blogs/on-the-money/1005-trade/298279-warren-raises-questions-about-widening-trade-deficit-with-south-korea

Massachusetts Democratic Sen. Elizabeth Warren raised questions on Tuesday about why the trade gap between the United States and South Korea has increased sharply since a free trade agreement went into effect nearly a year ago.
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A year after the implementation of the U.S.-Korea free trade agreement, which was cheered on its passage, Warren said she has "noticed the facts have not worked out so clearly."

While U.S. imports grew globally by 5 percent, imports were up 17 percent from Korea, and while U.S. exports were up 11 percent, they decreased by 5 percent to Korea.

A separate analysis released by Public Citizen on Tuesday, shows that exports to Korea are down 10 percent during the trade pact's first year, compared with before, while the trade deficit surged by 37 percent.

Who could have predicted this would happen? The Washington consensus told us to expect products sold around the world stamped with three proud words: “Made in America.”

Here is the fact sheet from public citizen and some "highlights".

Imports of cars and auto parts from Korea have soared 16 percent (more than $2.3 billion) under the FTA, driving a 16 percent increase in the U.S. trade deficit with Korea in autos and parts relative to the same months in the year before FTA implementation.

U.S. beef exports have declined by 8 percent under the FTA in comparison to the same months in the prior year, a $41 million loss in beef exports under just eleven months of the Korea FTA.

U.S. pork exports have fallen by 20 percent in comparison to the same months the previous year, a $78 million loss in pork exports in the months since the deal went into effect.

U.S. poultry producers have faced a 41 percent collapse of exports to Korea under the same FTA period – a $50 million reduction.

As Senator warren pointed out: "Obviously, based on the math, it (the Korea FTA) seems to be working at cross purposes with what you're trying to accomplish."

[MannyGoldstein]

1. Warren: Wrong Again!

The Korea FTA is doing exactly what Congress and Obama wanted it to do: make money for the 1%.

Of course they knew it would harm the American 99% as every previous FTA has, and as all impartial analyses has predicted.

[Elwood P Dowd]

2. K&R. The DU free trade and outsourcing zealots, all 3 fo them, will be here any minute defending

this insanity with their corporate/republican talking points.

[pa28]

3. The coming Trans-Pacific Partnership will dwarf this agreement in scope and impact.

More from the article:

"The Korea pact’s damaging outcomes being the opposite of the administration’s promises will certainly complicate the administration’s current efforts to use the same claims about export expansion to persuade Congress to delegate away its constitutional trade authority or to build support for the administration’s next trade deal, a massive 11-nation Trans-Pacific Partnership (TPP) based on the same model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

So when they try to tell trade agreements will benefit the 99% it's time to put on your hip waders.

[ucrdem]

4. If US imports globally grew 5%, and US exports globally grew 11%,

then it looks like S Korea is an anomaly, and the overall US trade deficit is declining, no?

[pa28]

5. She believes the Korean FTA is connected to the worsening trade deficit with that country.

This agreement was sold as a way to increase American exports to Korea. Unfortunately, we are experiencing the opposite result.

[ucrdem]

6. I see.

Okay that makes sense, thanks.

[Elwood P Dowd]

7. The annual trade deficit is still on schedule to be around 500 billion dollars.

Since the days of Reagan-Bush we've run up about 8 trillion dollars in trade deficits and lost over 10 million good paying US jobs to free trade deals and outsourcing policies.

[bhikkhu]

8. The US trade deficit is actually improving very well overall

and our trade deficit with China (a much larger trading partner than South Korea) hit a three year low. http://www.usatoday.com/story/money/business/2013/05/02/trade-deficit-march/2128791/ so there is some very real good news to put into the mix there.


The details on every product line might vary, and of course it would be nice to have more exports, but it is possible that the main effect of the trade agreement has been to favor trade with our strong ally South Korea, over trade with the more problematic China.

[Sen. Walter Sobchak]

9. The balance of trade between the US and Korea is erratic

There are a few issues in play, from Boeing being unable to deliver 2 billion dollars worth of 787's to Korean Airlines to European heavy machinery vendors (who already had a free trade agreement with Korea) aggressively discounting ahead of the implementation of the US-Korea FTA.

The agricultural issues have nothing to do with this and barely even register in the balance of trade.

The practical issue is that going into the FTA there was already a strong supply chain in place for the automotive industry, they just have to crank the knob, while other industries will take time to adapt their supply chains.

The other issue that has gone unspoken is even prior to the signing of the FTA many Korean exports were already covered by the 1997 WTO Information Technology Agreement.