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Korea-US FTA working as promised for both economies: Heritage Foundation report

All Headlines 05:11 September 01, 2016

WASHINGTON, Aug. 31 (Yonhap) -- The free trade agreement between the U.S. and South Korea has been working as promised, increasing both countries' exports to each other, a Heritage Foundation report has said, rejecting Donald Trump's claims that the deal has been a disaster for the American economy.

"U.S. protectionists have repeatedly claimed that the KORUS FTA has resulted in more imports from South Korea. That is true, but it has also resulted in more exports from the U.S. to South Korea," the foundation said in an Aug. 22 report.

"That is the whole point — to increase specialization and exchange so that both countries have access to more goods and services at better prices," the report said. "Analyses that focus on the trade deficit, equating it to lost jobs, simply do not stand up under careful scrutiny."

The pact, which has been in effect since 2012, may not have been working as fast as some would like it to, but the bottom line is that the deal has been working as promised, the report said, adding that a growing number of businesses in both countries have capitalized on the expanded opportunities:

Specifically, the report said that U.S. exports of goods to South Korea that benefit from the trade deal have been growing an average of nearly 5 percent each year, while U.S. auto exports increased by over 200 percent by value between 2011 and 2015, more than 14 times faster than the increase of U.S. auto exports to the world.

In addition, U.S. exports of services to the South have expanded by nearly $6 billion, or close to 35 percent, since the pact went into effect, the report said, benefiting American service industries, such as finance, insurance, energy services, logistics, and telecommunications, the report said.

Top 12 South Korean firms alone created more than 35,000 jobs in the U.S. last year alone, three times more than in 2012, the report said, adding that Korean firms are planning to make more direct investment in the U.S.

"In short, the KORUS FTA (Korea-U.S. FTA) has been strengthening America's economic engagement with South Korea, a trusted ally and a willing partner, not only in terms of greater market access and leveling the playing field under agreed rules, but also through a number of practical mechanisms for regular dialogue about specific challenges," the report said.

"A comprehensive trade pact like the KORUS FTA is not self-executing. Ensuring the evolving success of KORUS, and maximizing its intended utility as a platform for a greater economic partnership, will require Washington and Seoul to ensure full implementation and vigorous enforcement of the market-freeing measures in KORUS," it said.

In an attempt to rally support from voters struggling with economic woes, Trump has slammed free trade deals as a source of American economic problems. He has denounced the agreement with South Korea as a "job killing" deal, a "disaster," and a "perfect" example of "broken promises."

Trump claims the pact ended up increasing U.S. imports from South Korea while failing to increase exports.

The U.S. International Trade Commission (ITC) said in a report in late June that the Korea deal has been good for American interests, saying the agreement is estimated to have improved bilateral merchandise trade balances by $15.8 billion last year.

jschang@yna.co.kr
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