Six months after the implementation of the U.S. -- Korea Free Trade Agreement, U.S. Senator Bob Casey (D-PA), Chairman of the Joint Economic Committee (JEC), today released a JEC report showing that initial data indicate potentially troubling trends for U.S. businesses.
"While we only have preliminary data, I am not encouraged and I remain skeptical of these agreements," said Senator Casey. "For too long the needs, concerns and jobs of Pennsylvania workers have been last on the list when it comes to trade agreements. I intend to continue to work to see that Pennsylvania businesses end up on the winning side of this equation."
Standing with representatives of the PA Fair Trade Coalition, Senator Casey released a letter to U.S. Trade Representative Ron Kirk pushing for an analysis of the enactment of the agreement and for detailed information on what the Administration is doing to correct the potential problems with its South Korean counterparts.
In his letter, Senator Casey wrote, "As the enclosed report illuminates, the U.S. merchandise trade deficit with South Korea reflects the fact that we import far more manufactured goods from South Korea than we export into the country. Early indications are that this dynamic has only intensified since the agreement was implemented."
South Korea is the seventh largest trading partner with the United States. In past years, the trade deficit with Korea has grown steadily.
The free trade agreement between the U.S. and South Korea was signed into law in the fall of 2011 and became effective in the spring of this year. Senator Casey did not support the agreement due to concerns about impacts on Pennsylvania workers and businesses.
According to the JEC report released today, imports from South Korea have increased while exports to South Korea have decreased, a trend that could harm American manufacturers and cost Pennsylvania jobs if it continues.
Senator Casey's letter to U.S. Trade representative Ron Kirk is below:
The Honorable Ron Kirk
United States Trade Representative
Dear Ambassador Kirk:
As we approach the six-month anniversary of implementation of the South Korean free trade agreement, I asked my staff on the Joint Economic Committee (JEC) to pull together initial data on the economic impact of the agreement. In response to their work, which I include for your review, I have a few concerns and questions.
The U.S.-South Korea free trade agreement promised to improve the trade imbalance between our nations. As the JEC analysis points out, the United States has run a trade deficit with South Korea for more than a decade, largely driven by a shortfall of manufacturing exports to South Korea, particularly computers and electronics. In advocating in favor of the South Korea agreement, your office pointed to analysis by the U.S. International Trade Commission that predicted that U.S. exports to Korea would be $9.7-$10.9 billion higher once the agreement was fully implemented. The same report predicted that exports of machinery, electronics, transportation equipment and motor vehicles would "likely experience relatively large increases, primarily as a result of small tariff changes to large pre-existing trade flow."
Unfortunately, early data suggests these very export categories are in part driving a continuing high imbalance in our trade relationship with South Korea. As the enclosed report illuminates, the U.S. merchandise trade deficit with South Korea reflects the fact that we import far more manufactured goods from South Korea than we export into the country. Early indications are that this dynamic has only intensified since the agreement was implemented.
Recognizing that we are in the early days of agreement, I ask you to please provide me with an analysis of our trade relationship since enactment. I am particularly interested in the balance of trade. In addition, can you please share an overview of your ongoing dealings with your South Korean counterparts? I would like a specific sense of the timeline you have established for reaching the targets you shared with Congress. Also, it appears that electronics and computer imports are key drivers in the imbalance of trade. What, if any, specific efforts are underway to help these exporters? Lastly, I have continuing concerns about South Korean currency valuation and its impact on these dynamics. Can you please speak to the impact of this issue on the broader relationship as the agreement goes into effect?
Thank you in advance for your response to these questions.
Robert P. Casey, Jr.
United States Senator