By Ben Conner, USW Director of Policy
It was a decade ago this month that the United States completed its last successful free trade agreement negotiation. Under the Bush Administration, the United States and South Korea signed the U.S.-Korea Free Trade Agreement (KORUS) on June 30, 2007. However, it would be almost five more years before it entered into force following minor modifications by the Obama Administration.
Now the Trump Administration has hinted that it, too, may try to make its mark on the U.S.-Korea trade relationship, citing statistics that the U.S. goods trade deficit with South Korea has doubled since KORUS implementation in 2012.
History shows that with bilateral FTAs there are always issues that may block some trade, and balancing all bilateral trade relationships is impossible. For example, KORUS maintained major barriers to U.S. rice exports and the United States maintained significant barriers on Korean automotive exports. Reducing the overall trade deficit is a major policy goal of the United States, so renegotiating free trade agreements one by one is not the best approach.
The only way to reduce overall deficits is to promote savings and decrease consumption by U.S. citizens. The most effective way to do that is recession, as evidenced by 2009, the lowest U.S. trade deficit in the past 10 years and the heart of the “Great Recession.” New restrictions on trade are not likely to affect the trade deficit, except that they could lead to or exacerbate economic recession, an outcome previous U.S. administrations have wisely avoided.
Renegotiating agreements risks disrupting established supply chains and endangering trade. Our organization has worked for many decades to build a preference for U.S. wheat in South Korea. While there were limited policy barriers to U.S. wheat exports before KORUS, the agreement provides strong assurances about the continued viability of the trade relationship between U.S. wheat farmers and Korean customers. This is an extremely valuable trade relationship for both sides and it would be unfortunate for both partners if it does not remain open and fair.
USW will continue to advocate for trade policy that is based on openness to trade, with individual actors being free to choose with whom to buy and sell. That has always been the best policy framework for U.S. wheat farmers and their customers, and KORUS as it exists today for wheat trade is an important part of that system.