Trade Diversion And Trade Deficits The Case Of The Korea-U.s. Free Trade Agreement

We are looking at whether tariff preferences for South Korean products are granted through the implementation of Korea and the United States. The Free Trade Agreement (KORUS) diverted U.S. import demand from other U.S. trading partners because of trade diversion. We are looking at whether tariff preferences for South Korean products are granted through the implementation of Korea and the United States. The Free Trade Agreement (KORUS) diverted U.S. import demand from other U.S. trading partners because of trade diversion. In the two years since the introduction of KORUS, trade diversion has been particularly important for U.S. imports of consumer goods and for trading partners that already have free trade agreements with the United States. Our trade diversion estimates are $13.1 billion in 2013 and $13.8 billion in 2014. It should be noted that these trade diversion estimates are roughly in the order of the increase in the U.S.

bilateral trade deficit with South Korea. Thus, while the increase in U.S. imports from South Korea could have widened the bilateral trade deficit between the United States and South Korea, the fact that KORUS diverts U.S. import demand from other trading partners means that new U.S. imports from Korea, spurred by KORUS, have not widened the total U.S. trade deficit. Our trade diversion estimates are $13.1 billion in 2013 and $13.8 billion in 2014. It should be noted that these trade diversion estimates are roughly in the order of the increase in the U.S. bilateral trade deficit with South Korea.

In the two years since the introduction of KORUS, trade diversion has been particularly important for U.S. imports of consumer goods and for trading partners that already have free trade agreements with the United States. Thus, while the increase in U.S. imports from South Korea could have increased the bilateral trade deficit between the United States and South Korea, the fact that KORUS diverted U.S. import demand from other trading partners means that new U.S. imports from Korea, spurred by KORUS, have not increased the overall U.S. trade balance. We thank Kelly Stangl for her excellent support of the research. The views expressed in this section are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Katheryn N. Russ – Deborah L. Swenson, 2019.

“Trade diversion and deficits: the case of the free trade agreement between Korea and the United States of America,” Journal of the Japanese and International Economies. Quote courtesy of . We thank Kelly Stangl for her excellent support of the research. Trade diversion and deficits: the fall of the free trade agreement between Korea and the United States, Katheryn Russ, Deborah Swenson. in Globalization and Welfare Impacts of International Trade, Fukuda, Hoshi and Kimura. 2020.