Troy Stangarone: Was the Korea-US FTA Really a ‘Horrible Deal?’
April 10, 2019
Writing for the Diplomat Magazine, KEI Senior Director Troy Stangarone looks at the recently released set of data from the Commerce Department on U.S.-Korea trade from 2018.
With the overall U.S. trade deficit vis-a-vis South Korea now falling (contrasting the direction of the U.S. trade deficit with the world and with other major trading partners), Stangarone questions whether the original KORUS FTA was truly damaging for the domestic labor market as President Trump claimed on the campaign trail.
Specifically, he points out that U.S. exports to Korea in major categories such as machinery, chemicals, and transportation equipment all grew by more than $1 billion since KORUS has gone into effect. Notably, U.S. agricultural exports have also grown despite the decline in commodity prices.
Stangarone caveats that a large portion of the deficit reduction may be attributable to the increase in oil and gas exports to Korea – the result of the shale gas revolution. Nonetheless, the increased exports here have also been made possible by the removal of tariffs on petroleum imports under the original KORUS FTA.
All in all, Stangarone questions the veracity of President Trump's original claim on KORUS' adverse effect on the U.S. economy and whether the recent revisions are necessarily as important as the administration claims.