It’s increasingly difficult to visit a major news site – and especially its opinion section – without a flurry of claims that presumptive Republican presidential nominee Donald Trump’s trade policy proposals (what we can make of them) are dangerously misguided. As a result, it’s increasingly difficult to believe that any of these commentators have any familiarity with America’s trade performance with Korea.
This performance matters both in its own right, and because President Obama’s 2012 trade agreement with Korea was the model he used for the much broader Trans-Pacific Partnership (TPP) deal with eleven Pacific Rim countries (not yet including Korea) – which is opposed by Trump as well as by his Democratic counterpart, Hillary Clinton, and by her stubborn rival, Bernie Sanders.
As noted in my last post on the new (April) U.S. monthly trade figures, since the Korea deal went into effect in March, 2012, America’s merchandise trade deficit with Korea has jumped by nearly 485 percent. For some context, the U.S. global merchandise trade deficit has shrunk by 12.42 percent during this period.
But the Korea deal’s abject failure to promote U.S. growth and employment also becomes clear upon examining more recent trends. At the beginning of this month, folks who follow global economic and trade trends were shaken by reports that in May Korea’s global exports had just fallen in year-on-year terms for the 17th straight month. Their concerns were reflected Korea’s status as a “canary in the coal mine” for world trade and by extension the world economy.
But Korea’s been trading much more successfully with the United States during this period. The May U.S. trade data isn’t in yet, but we have the statistics through April. They show that during the preceding 16 months, when Korea’s goods exports fell consistently on an annual basis, they rose on-year to the United States in ten of those months. But America’s goods exports to Korea rose on-year in only three of those 16 months.
Since improving trade balances spur a country’s economic expansion, and worsening balances subtract from growth, it’s clear that trade with America has been a major factor in staving off complete disaster for Korea’s export-dependent economy. The United States isn’t anywhere near as reliant on trade, yet commerce with Korea still has been holding back American growth – and surely hiring.
America’s punditocracy and everyone else are entitled to scoff at Trump’s claims that he would negotiate better trade deals than Mr. Obama – and his predecessors. (The Korea initiative was launched by George W. Bush.) But the Korea results make it hard to imagine how he could do any worse.