What Jobs? After NAFTA-Style Deal, an Unparalleled Surge in Korea Trade Deficit
Last year, President Obama and Congressional Republicans sold the U.S. public the promise that a NAFTA-style deal with Korea, passed last October, would bring jobs by boosting U.S. exports. At the time, this claim contradicted even the government’s own projection that the trade deal would worsen the U.S.’s trade balance with South Korea. Now, it appears to contradict the evidence.
Since the March 15 implementation of the Korea trade deal, the U.S. trade deficit with South Korea has reached dramatic levels for the second consecutive month for which we have data. While the U.S.’s goods deficit with South Korea in March was a mere $0.6 billion, in April the deficit trebled to $1.8 billion. By contrast, the U.S. goods deficits with major trading partners like Japan, Mexico, and Germany all declined that month.
In May, the goods deficit with South Korea hit the $2 billion mark, the ninth largest monthly deficit among the U.S.’s 230 trading partners. (In May of last year, the deficit stood at only $1.3 billion and South Korea ranked 15th in deficit magnitude.) Indeed, from March to May, while the overall U.S. trade deficit fell, the deficit with South Korea increased more (in dollar terms) than with any other country in the world, except for one: China.
This worrisome data cripples the Obama Administration’s promise that more NAFTA-style deals will bring export-led job growth. The post-FTA surge in the trade deficit with Korea was prompted in part by a $759 million downfall in U.S. exports to Korea from March to May. Using a ratio employed by the International Trade Administration, the drop in exports over these two post-FTA months alone amounts to over 5,000 lost U.S. jobs.
Last month, President Obama’s campaign ads named Presidential hopeful Mitt Romney as a would-be “Outsourcer-in-Chief,” accusing the Republican candidate of offshoring U.S. jobs during his time at Bain Capital. Given the track record of the Korea trade deal thus far, perhaps the President should take some of his own medicine. He could start by telling his Administration to stop pushing forward the Trans-Pacific Partnership, a NAFTA-on-steroids deal with even larger job-killing prospects than what we’ve seen from the deficit-fostering Korea deal.