U.S.-Korea Free Trade Agreement

The U.S.-Korea Free Trade Agreement (FTA) — also known as KORUS — went into effect on March 15, 2012. This deal between the United States and South Korea used as its template the North American Free Trade Agreement (NAFTA), so it’s no surprise that its outcomes have been similarly devastating.

Five years of data from the International Trade Commission on the Korea FTA reveal:

  • Record-breaking U.S. trade deficits with Korea have become the new normal under the FTA – in 59 of the 60 months since the deal took effect, the U.S. goods trade deficit with Korea has exceeded the average monthly trade deficit in the five years before the deal.

  • Since the FTA took effect, U.S. average monthly exports to Korea have fallen in 9 of the 15 U.S. sectors that export the most to Korea, relative to the year before the FTA.

  • The auto sector was among the hardest hit: The U.S. trade deficit with Korea in motor vehicles grew 55.7 percent in the pact’s first five years. U.S. imports of motor vehicles from Korea have increased by 64.2 percent, or $6.4 billion by the fifth year of the Korea FTA.

  • Exports of machinery and computer/electronic products, collectively comprising 27 percent of U.S. exports to Korea, have fallen 17.1 and 18.8 percent, respectively.

  • U.S. exports to Korea of agricultural goods have fallen 5.4 percent in the first five years of the Korea FTA, despite almost two-thirds of U.S. agricultural exports by value obtaining immediate duty-free entry to Korea under the pact. U.S. agricultural imports from Korea, meanwhile, have grown 45.4 percent under the FTA. As a result, the U.S. agricultural trade balance with Korea has declined 8.1 percent, or $554 million, since the FTA’s implementation.

The Trump administration has begun talks to amend the Korea FTA, which President Trump called a job-killer on the campaign trail. But the wide gulf between candidate Trump’s fiery trade talk and his lack of deliverables as president to date calls into serious question the prospects for meaningful action on the Korea pact.

A coalition of civil society organizations from the United States and South Korea has called on both countries to oppose the Korea FTA’s corporate-centered terms, including investor-state dispute settlement that empowers multinational corporations to challenge our laws before panels of three private lawyers, intellectual property rules that drive up the cost of medicines and undermine human rights, rules that push a radical deregulation agenda, and more.

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