When the proposed South Korea–U.S. Free Trade Agreement (KORUS) was initially signed on June 30, 2007, Heritage Foundation analysts recognized significant benefits that would come from implementation of this landmark trade deal. Those benefits included more exports, more export-related jobs, and a stronger economy. As the Obama Administration has pointed out, the agreement would increase U.S. exports by billions of dollars and create tens of thousands of new export-related jobs.
KORUS would also strengthen the U.S. economy by reducing domestic trade barriers that act like a tax on American consumers and businesses, such as the “temporary” 25 percent tariff on imported pickup trucks that has been driving up prices ever since the U.S. government imposed it in 1963. As economic theory and facts reported in The Heritage Foundation’s Index of Economic Freedom demonstrate, reducing trade barriers—including those we place on ourselves—increases our economic growth. Exports are good, but imports create jobs for Americans, too. Just ask the longshoremen, truck drivers, lawyers, accountants, marketers, and sales clerks whose livelihoods depend on the streams of imported goods that increase our standard of living.
Although KORUS was completed over three-and-a-half years ago, President Obama refused to submit it to Congress until he put his Administration’s mark on it.
His changes include charging American consumers a 2.5 percent tax on cars made in South Korea for five more years instead of eliminating it immediately, as originally agreed to, maintaining the 25 percent tariff on imported pickup trucks for eight more years, and forcing South Koreans to pay taxes on U.S. pork until 2016 instead of 2014.
Although the final document has yet to be released to the public, it appears that despite such backtracking, KORUS will eliminate 95 percent of barriers to trade in consumer and industrial goods between people living in the United States and those living in South Korea within the next five years.
If so, this trade agreement will represent a welcome deviation from the Obama Administration’s other job-killing initiatives. Given the highest unemployment rates and weakest economy in a generation, it is just unfortunate that Americans had to wait for it for so long.