Com­pound­ing Obama’s woes on TPP

The Washington Times Weekly - - Geopolitics -

agree­ment would open pre­vi­ously closed mar­ket sec­tors to U.S. ex­porters.

“The U.S.-South Korea trade deficit reached a his­toric high of $20.673 bil­lion [in 2014], an in­crease of $8.6 bil­lion (47 per­cent) from 2011 — the year be­fore the U.S.-Korea Free Trade Agree­ment (KORUS) took ef­fect,” they said at the time. “In ad­di­tion, ex­ports are down $2 bil­lion since 2011 and down $700 mil­lion since 2012. The re­sult has been the loss of 40,000 U.S. jobs.”

The three law­mak­ers, who’ve led the charge against Pres­i­dent Obama’s push for an even big­ger, multi­na­tion free trade deal known as the Trans-Pa­cific Part­ner­ship, made the state­ment af­ter U.S. Trade Rep­re­sen­ta­tive Michael Fro­man had tes­ti­fied be­fore Congress on the ben­e­fits of agree­ments like the one that’s been in place be­tween the U.S. and South Korea for the past three years.

Mr. Fro­man de­clined to com­ment for this story, and a mem­ber of his staff down­played the pos­si­bil­ity that U.S. trade of­fi­cials are con­cerned that South Korea may be abus­ing the free trade pace to pre­serve pro­tec­tion­ist poli­cies for com­pa­nies like Sam­sung.

How­ever, Mr. Fro­man him­self is­sued a state­ment in March, on the third an­niver­sary of the trade deal, claim­ing progress but also con­ced­ing that Seoul still has a ways to go to stamp out past pro­tec­tion­ist prac­tices.

“There is, of course, much more room for growth, given how closed Korea’s mar­ket was be­fore this agree­ment,” he said at the time. “The num­bers are en­cour­ag­ing, but this story is about more than num­bers.”

A lengthy fact sheet on South Korea’s in­vest­ment and reg­u­la­tory cli­mate by the U.S. gov­ern­ment’s Ex­ praised the coun­try’s fi­nan­cial and le­gal sys­tems, but ac­knowl­edged con­tin­u­ing prob­lems over mar­ket ac­cess. There are re­stric­tions on for­eign own­er­ship and in­vest­ment on 27 busi­ness sec­tors, in­clud­ing to­tal bans on nu­clear power gen­er­a­tion and ra­dio and tele­vi­sion broad­cast­ing, although Seoul of­fi­cials say the num­ber of re­stric­tions is be­low

the av­er­age of most de­vel­oped economies.

Reg­u­la­tory hur­dles

The reg­u­la­tory en­vi­ron­ment still lags be­hind, ac­cord­ing to the anal­y­sis.

“The Korean reg­u­la­tory en­vi­ron­ment can pose chal­lenges for all firms, both for­eign and do­mes­tic,” ac­cord­ing to the Ex­ web­site. “Laws and reg­u­la­tions are of­ten framed in gen­eral terms and are sub­ject to dif­fer­ing in­ter­pre­ta­tions by gov­ern­ment of­fi­cials, who ro­tate fre­quently. Reg­u­la­tions are some­times pro­mul­gated with only min­i­mal con­sul­ta­tion with in­dus­try and with only the min­i­mally re­quired com­ment pe­riod.”

While avoid­ing any men­tion of the grow­ing bi­lat­eral trade deficit, a care­fully crafted White House “fact sheet” noted that to­tal ex­port of U.S. goods to Korea ac­tu­ally reached “a record level of $44.5 bil­lion” in 2014.

“Year-on-year goods ex­ports to Korea for 2014 were up 6.8 per­cent com­pared to 2013,” the fact sheet said, adding that to­tal ex­ports are 8.7 per­cent above what they had been prior to the im­ple­men­ta­tion of the U.S.-Korea Free Trade Agree­ment — with growth “strong across high-tech­nol­ogy man­u­fac­tur­ing, autos, heavy in­dus­try, and con­sumer goods.”

But there has also been some no­table fric­tion be­tween U.S. and Korean com­pa­nies over the past three years,

The most no­table ex­am­ple in­volves wash­ing ma­chines, roughly $1 bil­lion worth of which Korea is es­ti­mated to ex­port into the U.S. an­nu­ally.

Dur­ing the years lead­ing up to the sign­ing of the U.S.-Korea Free Trade Agree­ment, the Amer­i­can home ap­pli­ances gi­ant Whirlpool filed com­plaints with the U.S. In­ter­na­tional Trade Com­mis­sion al­leg­ing that South Korean-made wash­ing ma­chines were be­ing “dumped” — priced be­low fair mar­ket value — in the U.S. mar­ket.

The trade com­mis­sion ruled in fa­vor of Whirlpool, prompt­ing South Korean trade of­fi­cials to re­spond with their own

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