Compounding Obama’s woes on TPP
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 Export.gov 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.
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 Export.gov 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