The Political Side of KORUS
Nearly a year after taking effect, the Korea-U.S. Free Trade Agreement (KORUS) has exhibited many of the dangerous symptoms that many experts had feared. KORUS embodies many of the same problems of NAFTA, which pits American manufacturers against an unregulated labor force that works for lower wages. But the political aspect of the pact is now starting to rear its ugly head, raising questions regarding both China and North Korea.
It has been suggested since the KORUS negotiations that China may end up using South Korea as a pipeline to export more duty-free goods to the United States. China has been America’s main competitor in the global market for years now, and they have not been shy about playing unfairly. By using tactics to block American exports and forcing an abundance of imports onto our shores, China built a massive trade surplus with the United States. China also holds quities on the Korean peninsula, which means that KORUS opened up another avenue to crowd American shorelines with Chinese merchandise.
Now, South Korea and China are in talks for their own potential free trade agreement. This would indirectly bind the U.S. and China through a mutual trade partner. To make matters worse, competing with China for market share in South Korea is a no-win situation for American business. China has been largely successful in the international commercial market because of their state-owned enterprises and reduced labor regulations. The United States would almost certainly see a decline in exports to South Korea if they are forced into this contest.
Another major diplomatic concern with KORUS is the presence of North Korea. Obviously there is always some level of hesitation when dealing in such close quarters with one of America’s biggest adversaries. The instability of Kim Jong Un’s regime in North Korea is exacerbating these concerns. Should the North Korean government collapse, the fallout would likely result in a chaotic outbreak of warring coalitions and anarchy. Even as matters stabilize, the impending obstacle of reuniting the two Koreas could prove lengthy, hazardous and detrimental to long-term business. This state of affairs would prove to be dangerous to the U.S. in every sense of the word.
Plenty of economic attention has been given to KORUS, both by its detractors and supporters. But the agreement reaches beyond the borders of South Korea, and it now has the United States facing some hostile circumstances. Lawmakers need to understand that KORUS and similar agreements come with baggage, and the impact can reach far beyond simple economics. Of course, all of these and other problems could easily be averted if the United States redirected its concern to sustaining itself, and left “free” trade off the negotiation table altogether.