Tuesday, June 19, 2012

New Data Reveals The Dire Effects of the U.S.-South Korea Unfair Trade Agreement


On Mar 15, 2012, a new free trade agreement with South Korea went into affect.  Here is how the government says the agreement will help American businesses:
The entry into force of the U.S.-Korea trade agreement on March 15, 2012 means countless new opportunities for U.S. exporters to sell more Made-in-America goods, services, and agricultural products to Korean customers – and to support more good jobs here at home.
They say statistics don't lie.  Here's how the AP reported changes to trade between the US and S. Korea the month after the new free trade agreement went into affect:
For April, the United States ran a $1.8 billion trade deficit with South Korea, three times the size of the March deficit. Imports from South Korea jumped 14.7 percent to $5.5 billion, the highest on record. U.S. exports to South Korea fell 12.3 percent to $3.7 billion.
Economic nationalists argue that the country needs trade policies that put America first:
Global free trade means U.S. workers compete with Asian and Latin American workers whose wages are a fraction of our own and whose benefits may be nonexistent. Global free trade means U.S factories that relocate to Indonesia or India need not observe U.S. laws on health, safety, pollution or paying a minimum wage.
Global free trade means that companies that move factories outside the United States can send their products back to the United States free of charge and undercut businessmen who retain their American workers and live within American laws.
Free trade makes suckers and fools out of patriots.
Anticipating the Davos crowd, Thomas Jefferson wrote: “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.”
Instead of a trade policy crafted for the benefit of multinationalist corporations, we need a new trade policy that puts America and Americans first.  
Looking at the dramatic negative results free trade agreements with Mexico, China, S. Korea and others have had on the U.S. economy, it's hard to argue with that opinion.

Update: Vox Day tackles the free trade myth of wealth creation:

This chart shows the free trade case. Since 1960, the trade deficit has gone from +3.5 billion to -494.7 billion while GDP/Capita has grown from $2,935.49 to $47,790.09. The growth in GDP has increased much faster than the population growth, therefore it appears to be obvious that the trade deficit is not only making the world richer, it is making the United States richer. However, this does not tell the entire story. As I mentioned previously, both the classical and the conventional free trade cases, like the Neo-Keynesian case for government intervention, completely fail to take debt into account.

Notice how adding the overall debt level of the economy completely changes the picture and makes it obvious how the trade deficit is impoverishing the USA despite the increase in GDP. GDP that does not account for debt is a terrible measure of wealth and every bit as misleading as GDP that does not account for inflation, as it is nothing more than a metric intended to track national income. Whereas per capita wealth, measured by GDP/capita - debt/capita was only -$1,417 in 1960, it has increased by two orders of magnitude to -$120,014. Debt that could once be paid off in 17 months would now require 42 months. 



2 comments:

Anonymous said...

As Pat Buchanan has often asked before, how many times does he have to be right and the free traders wrong before our policy makers start to question the wisdom of abandoning our old economic models in favor of free trade?

Anonymous said...

In March of this year, the WSJ wrote about this deal:

Because South Korea's import tariffs were generally higher than the U.S.'s, the effect of the deal will likely be to reduce South Korea's surplus in trade with the U.S., which amounted to $13.1 billion last year, but not eliminate it completely.

It looks like the exact opposite happened. Buchanan 959, free traitors zero.