American president Donald Trump appears to have changed his mind about a trade deal with South Korea.
As recently as a month ago, there were reports Trump was on the verge of withdrawing from the agreement.
Now American and Korean trade negotiators have agreed to amend the treaty in order to make it “fair” and “reciprocal”.
I doubt changes will really make the pact fairer and not more favorable to the United States. But that would still be better than canceling it.
Benefits
The trade agreement has economic and security benefits:
- Economic: Estimates are the treaty will add $10 billion to the American economy and lead to a net gain of 70,000 to 280,000 jobs.
- Security: The pact strengthens a crucial alliance in Northeast Asia and gives South Korea leverage with its powerful neighbor, China.
Rebutting the critics
Critics, like Trump, argue the deal is one-sided. They point out that America’s trade deficit in goods with South Korea has more than doubled, to $27 billion, since the treaty came into effect in 2012.
But they overlook three things:
- Trade deficits aren’t necessarily a bad thing.
- South Korea now developed a deficit in terms of services traded with the United States.
- America’s total trade deficit with South Korea — counting goods and services — has fallen from nearly $19 to $13 billion per year.