My latest video post discussed the potential benefits of the U.S-South Korea free trade agreement. However, the U.S. trade deficit with South Korea in manufactured goods has increased since the agreement took effect in March of this year.
According to a U.S. Congress Joint Economic Committee report, U.S. exports in goods to South Korea dropped from US$4.2 billion in March to US$3.5 billion in July. U.S. Imports from South Korea increased from US$4.8 billion to US$5.4 billion during the same period.
The United States mainly imports computer and electronic products from South Korea. On an industry-by-industry analysis, the United States holds a trade surplus with South Korea in food, chemicals and machinery, according to the same report.
I agree with the reports final conclusion that it still too early to draw a definitive conclusion about the impact of the agreement on the U.S. economy.
I would also go further to state that even if the agreement does not result in a trade surplus for the United States, it is not a zero-sum game on an industry level. Producers in the food, chemicals and machinery sectors benefit from increased access to the South Korean market, which, in turn, helps the labor market in the United States.