In March, the Obama administration implemented a trade agreement with South Korea that it promised, implausibly, would create tens of thousands of jobs to the U.S.
While we’ve had just two monthly trade reports since the agreement went into effect, they’re not looking good for the home team, as David Cay Johnston of Reuters is sharp to point out. In April and May, the U.S. trade deficit with South Korea soared 63 percent from 2011. In May, U.S. exports to Korea dropped 11 percent while imports rose 5 percent. There has been virtually no other American press coverage of the increased trade deficit since KORUS went into effect. It’s early, of course, but the press should be keeping a close eye on this story.
Good for Reuters for doing so. Johnston travelsto Seoul to explore just why President Obama signed the KORUS agreement and what it’s likely to mean for American workers. He’s not optimistic, and with good reason, pointing to the history of failed jobs projections from the so-called free-trade side, as well as common sense issues like that selling American cars in Korea is about as likely as selling Korean cars in Detroit:
In Seoul, local people told me that buying an American-made car risked opprobrium from employers and neighbors.
In three days in Seoul, as the video accompanying this column shows, I found very few American-made cars. Three, on a showroom floor, were Toyotas built in Ohio. On the streets, I counted a half dozen Chrysler vans, a similar number of Ford sedans and one Jeep but not a single American luxury car. I also saw a smattering of cars with Chevrolet nameplates, but they were built locally by the old Daewoo, now called GM Korea.
Recall that Rust Belt debate in the 2008 primaries when Obama said he had opposed NAFTA from the beginning and would renegotiate it if elected: “I think we should use the hammer of a potential opt-out as leverage.”
It emerged a week later that his top economic adviser, Austan Goolsbee, had recently winked and nodded at concerned Canadian officials in private, letting them know that Obama was just foolin’—that his promises were, in the words of a leaked Canadian memo, “more reflective of political maneuvering than policy.” In other words, he was misleading voters about his true intentions regarding critical trade policies.
Three months into his administration, Obama confirmed he would not reopen NAFTA to make it fairer to the U.S., which has seen its $5 billion trade surplus with Mexico turn into a $54 billion deficit last year (about $20 billion of that is from oil and other energy products).
This is far from the president’s first flip flop on trade. In 2008, he attacked George W. Bush’s China trade policies and promised to “be better bargainers and say look, here’s the bottom line, you guys keep on manipulating your currency, we are going to start shutting off access to some of our markets.” By keeping its currency artificially weak, China makes its exports cheaper and protects itself from American imports. That policy helped boost our China trade deficit to $282 billion last year.
Since taking office and despite his tough Campaign 2008 talk, Obama has repeatedly refused to label China a currency manipulator. When Mitt Romney said in June that he would label China a manipulator if elected, Obama’s campaign had the gall to say that “Threatening to label China a currency manipulator is reckless and unnecessary” and called Romney’s position a “campaign-year conversion,” according to the Associated Press.
It surely is a campaign conversion, but what’s worse is the post-election reversion—when the campaign promise turns out to be a cynical and unfulfilled pledge. The AP whiffed on Obama’s hypocrisy, which is a big miss. It was only four years ago, guys.
Now the administration’s Korea policy is showing early signs that it will follow NAFTA in widening trade deficits. Up next is the Trans-Pacific Partnership, which is being negotiated in secret and which looks set to break more Obama campaign promises.
The early returns on KORUS ought to be worth a story or ten, don’t you think? Good for Johnston and Reuters for pointing them out.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.