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One Big Reason to Keep KORUS (And Five Economic Facts that Matter)
Rumors are swirling that the Trump Administration is ready to begin the process to withdraw from the Korea-U.S. free trade agreement (KORUS), supposedly over a dispute about the trade deficit with Korea.
There are many reasons to stay in KORUS, or at least be thoughtful about approaching a renegotiation. The most important reason is geopolitical, but the economics make a strong argument as well.
We Cannot Alienate an Important Ally
Korea is one of our most important allies and is vital to our strategic geopolitical interests in Asia. Threatening our trade agreement could jeopardize this important relationship.
The U.S. and Korea have deep ties through our militaries, democratic values, and shared perspective on many important world issues. The Korean military has fought alongside us in Vietnam, Operation Desert Storm, and the post-9/11 campaigns in Iraq and Afghanistan. President George H.W. Bush designated Korea as a major non-NATO ally, underscoring just how important our relationship is.
A democracy since the 1980s, Korea’s system is both well-established and similar to the United States, with competitive elections, a vibrant and diverse media, and respect for the rule of law. Korea’s constitution provides for a government with separation of powers, checks and balances, and guarantees of human and civil rights.
Korea votes with the United States at the United Nations General Assembly more often than other traditional allies like Japan. It is truly one of our closest and most important allies.
Despite these deep and long-standing ties, we cannot take this relationship for granted. A hasty withdrawal from the newest part of our relationship, KORUS, would be a damaging move at an inopportune time. The dictatorship in North Korea has always been dangerous, and is even more eager to show off its ability to cause mass destruction. South Korea and the thousands of U.S. military personnel stationed there are the most vulnerable should North Korea attack. We cannot jeopardize our relationship, especially now when tensions with Pyongyang are high.
From North Korea to trade agreements there is more urgency and need to get a United States ambassador to Seoul nominated and confirmed pronto.
Five Compelling Economic Facts on KORUS
Global trade is important to the health of our domestic economy, and KORUS is no exception. Withdrawing from KORUS would cause unnecessary disruption and higher costs for domestic producers of goods and services. Here are five economic facts on KORUS that are compelling:
- We trade over $140 billion per year with South Korea. According to the U.S. Trade Representative, the United States and South Korea had two-way goods and services trade of $144.6 billion in 2016. This is a significant amount when you consider South Korea’s size. With a population of a bit over 50 million and total GDP under $2 trillion, South Korea is considerably smaller than the United States, but still manages a strong trade relationship.
- U.S. services exports have grown under KORUS. Since KORUS entered into force, U.S. services exports to South Korea have increased from $16.7 billion in 2011 to $21.6 billion in 2016. As the U.S. economy becomes more service-oriented, this trade in services will become increasingly important to the health of our domestic economy.
- KORUS made South Korea our 5th largest agricultural export market. Prior to KORUS, tariffs and other restrictions limited the competitiveness of U.S. agricultural products in South Korea. We now export more than $6 billion in agricultural products to South Korea. Beef and beef products lead the way, with exports over $1 billion. Corn, fresh fruit, prepared foods, and pork and pork products round out the top five exports. We should ask ourselves who is going to buy those things if we renounce KORUS and the South Korean market closes to our goods.
- KORUS tripled U.S. auto exports to South Korea. We exported more than 50,000 vehicles to South Korea last year, a 200 percent increase in just four years. That’s over $2 billion in automobiles, supporting thousands of manufacturing jobs in the United States.
- South Korea invests more in the U.S. since KORUS. Foreign direct investment (FDI) from South Korea to the U.S. was $40.1 billion in 2015. In 2011, that number was less than $20 billion.
Laura Collins is the Deputy Director, Economic Growth at the George W. Bush Institute. Laura previously served as the Director of Immigration Policy at the American Action Forum. Laura has experience in politics, working as a Senior Research Analyst at the Republican National Committee for the 2012 election cycle and in the Texas House of Representatives for the 82nd Legislature. A former practicing attorney, Laura earned a JD from The University of Texas School of Law and a BBA from the University of Oklahoma.Full Bio
Lindsay Lloyd is the Deputy Director of the Human Freedom Initiative at the George W. Bush Institute, where he manages original research and programmatic efforts to advance freedom and democracy in the world. Lindsay currently leads the Bush Institute’s Freedom in North Korea project, which raises awareness of human rights violations in North Korea, proposes new policy solutions, and engages leaders to help improve the lives of the North Korean people. Lindsay is also responsible for managing the Freedom Collection, a multimedia archive that documents the stories of nonviolent freedom advocates from around the word.
Prior to joining the Bush Institute, Lindsay served for 16 years at the International Republican Institute (IRI), most recently as senior advisor for policy. Previously, he was IRI’s regional director for Europe and co-director of the regional program for Central and Eastern Europe, which was based in Slovakia. At IRI, Lindsay worked with candidates, elected officials, political parties, and civil society activists to develop lasting democratic institutions.
Before joining IRI, Lindsay worked for several members and the leadership of the U.S. House of Representatives, as political director for a political action committee, and for Jack Kemp’s 1988 presidential campaign. He graduated from Georgetown University’s School of Foreign Service.Full Bio