WASHINGTON — More than a year after it took effect, a highly touted trade deal with South Korea has failed to produce as expected for the U.S.: Exports are down, imports are up and the trade deficit with the Asian economic powerhouse has ballooned.
In Washington state, where global trade is now linked to two of every five jobs, trade supporters are happy: Exports of aircraft and parts to Korea rose by more than 75 percent last year, and Koreans are gobbling up more of the state’s prized cherries and apples.
But across the nation, the picture looks far bleaker.
Overall, U.S. exports to Korea from March 2012 to this February fell to $42 billion, a 6 percent decline from the previous one-year period, according to the Office of the U.S. Trade Representative. During the same time, Korean imports increased by 4 percent.
The U.S. trade deficit with Korea went from $13.2 billion at the end of 2011 to nearly $16.6 billion at the end of last year, according to the U.S. Census Bureau.
Boosters of the pact say it’s too soon to predict how it will pan out.
“To judge it after a year and say it’s a success or failure is a little bit premature, certainly,” said Eric Schinfeld, president of the Washington Council on International Trade in Seattle.
The deal with South Korea is one of three free-trade agreements, along with Colombia and Panama, that Congress passed in 2011 at the urging of President Barack Obama. The Korean deal, by far the largest and offering U.S. businesses the most potential in selling more goods overseas, took effect March 15 of last year.
On Capitol Hill, some are sounding alarms.
Sen. Elizabeth Warren, D-Mass., raised the issue before the Senate Banking, Housing and Urban Affairs Committee earlier this month during a confirmation hearing for Export-Import Bank President Fred Hochberg. She told Hochberg that his job is to increase exports and reduce the trade deficit.
Opponents hope that unhappiness with the early results of the Korean trade deal will lead more members of Congress to look skeptically at free-trade proposals, making it more difficult for Obama to win approval for his Trans-Pacific Partnership. That proposed pact, which is being negotiated by 11 nations, would seek to expand trade throughout the Pacific Rim. It promises to be the largest trade deal Congress has ever considered.
“It’s critical that Congress take note of that and demand changes,” said Arthur Stamoulis, the executive director of the Citizens Trade Campaign, a coalition of environmental, farm and consumer groups that’s a leading opponent of the Korea and Pacific Rim trade pacts.
Noting that the Obama administration has been busy touting the South Korea deal, most recently during a visit to Washington, D.C., by South Korean President Park Geun-hye two weeks ago, Stamoulis said supporters of the pact should take a hard look at the statistics.
“I think folks in the Obama administration either aren’t looking at the numbers or they’re intentionally misleading folks,” he said. “Because the data is clear: This is a pact that has undercut the president’s goals for export growth and job creation.”
In response, Schinfeld said rising imports weren’t necessarily bad and didn’t provide evidence that a trade deal wasn’t working. Instead, he said, they can merely reflect the fact that consumer demand is increasing and Americans are buying more products.