The government routinely overestimates the value of trade agreements. We have bi-lateral trade agreements with 17 countries right now. If they were so great, why do we accelerate offshoring and trade deficits?
The government’s estimate of the South Korea-United States Free Trade Agreement (KORUS FTA) actually (and inconveniently for them) shows that we will increase our U.S. trade deficit in goods with the world if it passes.
The U.S. International Trade Commission (ITC) made the projection. They are always too optimistic. But even under their assumptions, our trade situation gets worse. They say that our bi-lateral trade in goods with Korea will be a small surplus… which means exports of goods will slightly exceed imports.
But… about 1/2 of the exports from the U.S. to Korea are already being shipped to other countries. They won’t be new exports. So Korea is projected by the ITC to cannibalize U.S. exports elsewhere to produce their hoped for surplus, which means our trade deficit in goods with the rest of the world will become worse. And the trade deficit with the world, including Korea, will become worse.
You will find President Obama say that the KORUS FTA will “support” a large number of jobs. “Support” of jobs is distinctly different from “creating” jobs. Because the job creation number is much lower. And “support” of jobs excludes the jobs lost from new imports. Obama does not talk about that (neither did Bush).
The KORUS FTA will allow Korea to continue manipulating currency. It will allow them to keep their 10% VAT tariff and increase it in the future (as other countries have done). It takes away our sovereignty because it will allow their companies that invest here to sue our federal, state and local governments if laws are passed that interfere with the foreign companies’ profit expectations (like an emissions law or a family leave law that costs them money).
We need a national trade strategy before doing another one of these failed deals that have helpfully caused massive trade deficits.