ED Korea-US FTA revisited

The Korea-U.S. free trade agreement marks its fifth anniversary Wednesday. There had been violent rallies across the country opposing the pact during negotiations and ratification, and there had been wild rumors that mad cow disease would be rampant after Seoul resumed importing U.S. beef. Five years later, however, the so-called KORUS-FTA is a win-win agreement for both countries.

Bilateral trade and investment has grown over the past five years. While global trade declined at an average 2 percent a year, trade between Korea and the U.S. grew by an average 1.7 percent. Korean products accounted for 3.25 percent of American imports last year, up from 2.6 percent in 2011. Likewise, the U.S. share of Korean imports rose from 8.5 percent to 10.6 percent during the period.

Washington has consistently suffered trade deficits with Seoul since the trade pact went into effect in 2012, but its surplus in the services sector swelled from $10.9 billion in 2011 to $14.1 billion in 2016. Korea’s investment in the U.S. more than doubled to $40.1 billion in 2015, compared with $19.9 billion in 2011, while U.S. investment in Korea jumped 23 percent.

Contrary to popular belief, Korea’s farm sector has remained unscathed from American products. U.S. automakers also benefited considerably from the trade accord, with their market share expanding rapidly here.

What has been achieved through the bilateral FTA reaffirms that free trade is the right direction. This is why Korea, which relies heavily on trade, must make better use of free trade agreements.

Things are not necessarily bright for the pact. The Trump administration could demand a renegotiation, claiming that the FTA has caused a sharp increase in the U.S. trade deficit.

But the truth is that Korea did not benefit from the FTA unilaterally and the U.S. posted huge surpluses in the services sector. Job creation through Korea’s investment also helped the U.S. economy thrive.

Should the U.S. call for renegotiation, our trade authorities should convince their counterparts squarely that the trade accord benefited both countries. It is time for them to double efforts to maintain win-win results through the free trade accord.