Presumptive U.S. Republican presidential candidate Donald Trump formally announced his trade policy’s commitment to protectionism on June 28. In a speech held in Monessen, Pennsylvania, he described the trade policies promoted by the Democratic administration — such as the U.S.-Korea Free Trade Agreement and the North American Free Trade Agreement — as failures, and said he would take corrective action if elected president. He therefore affirmed that with a President Trump, America will walk a new isolationist path not only in foreign affairs, but also in trade.
In particular, he targeted the KORUS FTA saying, “It was also Hillary Clinton, as secretary of state, who shoved us into a job-killing deal with South Korea in 2012. As reported by the Economic Policy Institute in May, this deal doubled our trade deficit with South Korea and destroyed nearly 100,000 American jobs.” This can be interpreted to mean that as president, Trump will either drastically modify or eliminate the KORUS FTA through renegotiation.
It’s true that the trade deficit for the United States increased significantly after the KORUS FTA came into effect in March 2012. It went from $15.2 billion in 2012 to $25.8 billion in 2015. However, trade balance is influenced by multiple factors, including exchange rates, economic demand and comparative advantage. To ignore how these factors come into play and straight out blame the KORUS FTA is a simplistic thought process that one does not expect from a presidential candidate.
The absurdity of his claim can be further proven by a report released yesterday by the U.S. International Trade Commission, an independent federal agency that assesses the industrial damage caused by trade. According to the report “Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedure,” the KORUS FTA brought about a $4.8 billion to $5.3 billion-ranged increase for U.S. exports. Specifically, last year, the U.S. experienced a $15.8 billion improvement in bilateral trade balance. Without the KORUS FTA, the U.S. trade deficit would have been greater at $41.6 billion.
Britain’s vote to leave the European Union, aka Brexit, clearly demonstrates how horrible populism can be, distorting public opinion with inaccurate information. Trump’s irresponsible accusations that aim at the KORUS FTA in order to gain more votes should be judged coldly by the American electorate.