We're not ready for free trade with Korea

Thursday, July 1, 2010

The June 28 editorial "Smart trade," in support of the proposed free-trade agreement between the United States and South Korea, said that such a deal will result in "opening the trillion-dollar Korean economy to a wide range of U.S. products and services." This, the editorial claimed, "will go a long way toward helping Mr. Obama meet his goal of doubling U.S. exports over the next half-decade."

The same argument has been used over the past 20 years to promote agreements expanding trade with China, Mexico and a dozen other countries. Exports have risen. But imports and the offshoring of production have risen much faster, adding to our massive trade deficit and foreign debt and undercutting both American wages and overall economic growth.

The reality is that the U.S. economy -- as opposed to U.S.-headquartered multinationals -- is not internationally competitive. We are running chronic trade deficits in traditional and high-tech industries. Before any more agreements are signed, we need a serious, large-scale commitment to upgrading our infrastructure, skills and industrial technology for domestic production. Otherwise, the Korea trade pact will just dig us deeper into our financial hole.

Jeff Faux, Washington

The writer is a fellow at the Economic Policy Institute.

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