Future of of U.S. S.-Kor orea a Trade R Relation ons Phil Eskeland, Executive Director Remarks before the Korean Chamber of Commerce & Industry in the USA Fort Lee, New Jersey, September 28, 2017
About KEI KEI • KEI is a Washington, D.C.-based non-profit, non-lobbying “think-tank,” founded in 1982, that has the mission to promote dialogue and understanding on all aspects – political, security, and economic – of the U.S.- Republic of Korea (ROK) relationship. • KEI accomplishes this task through research and public outreach to the academic, business, Korean- American, and policymaking community all throughout the United States. • KEI is funded by the Korea Institute for International Economic Policy (KIEP) based in Sejong City, ROK. • KEI has nine persons on its staff, including President & CEO Donald Manzullo , who served in the U.S. House of Representatives and on the Foreign Affairs Committee for 20 years, including as the top Republican on the Asia & the Pacific Subcommittee for six years, and Vice President Mark Tokola , who served as a Foreign Service Officer at the U.S. Department of State for 38 years, including three years as the #2 U.S. diplomat (Deputy Chief of Mission) at the U.S. Embassy in Seoul. • I served for 25 years as a senior Congressional staff member, serving in various executive capacities in both a personal and committee office, primarily as a trade and foreign policy expert to Members of Congress.
“He who knows only his own side of the case knows little of that.” John Stuart Mill What M Matters t to Trump? (Pa Part I I) • On September 2, 1987 , when conservative icon Ronald Reagan was President, wealthy New York real estate developer Donald Trump paid nearly $100,000 to publish an open letter to the American people in three major newspapers to criticize the U.S. government for allowing Japan and other nations to take advantage of the United States through large trade surpluses while not paying for the protection the U.S. extends to them. • Trump links trade and budget deficits together, which he believes has led to America’s massive national debt. • Thus, Trump’s 2016 campaign rhetoric was nothing new for him – this is his long-held immovable belief.
What M Matt tters to Trump? Reversin ing th thes ese i images! ( ! (Part I II) Locked factory gates Empty factory floor; idle machinery Scenes from Donald Trump’s final 2016 campaign ad “A picture is worth a thousand words”
What t Does oes Trump S Say C Closed U U.S. F Fact ctor ory D Door ors? • “Disastrous trade deals” that led to the “destruction of our factories and our jobs…robbed our working class” and “stripped our country of its wealth.” (from Donald Trump’s final 2 minute “closing argument” campaign ad, viewed over 8 million times) • “For many decades, we’ve enriched foreign industry at the expense of American industry; We’ve made other countries rich while the wealth, strength, and confidence of our country has disappeared over the horizon. One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind. The wealth of our middle class has been ripped from their homes and then redistributed across the entire world… We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.” (Inaugural address of President Donald Trump, January 20, 2017)
What are T Trump’s c concerns about K KORUS US? • U.S. merchandise trade deficit with South Korea more than doubled between 2011 (pre-KORUS FTA) and 2016, going from $13.2 billion to $27.6 billion. • U.S. exports of goods to South Korea declined 3 percent between 2011 ($43. 5 billion) and 2016 ($42.3 billion) while U.S. imports of Korean products grew by 23 percent during that same time period ($56.7 billion in 2011 to $69.9 billion in 2016). • U.S. goods and services trade deficit with South Korea nearly tripled between 2011 ($5.4 billion) and 2016 ($17.5 billion). • Trump blamed his presidential campaign rival, Hillary Clinton, because she was Secretary of State when the final version of KORUS was negotiated and passed Congress. • Trump relies on a flawed analysis from by a pro-labor union “think tank” in Washington, D.C. [Economic Policy Institute or EPI] for the more than 95,000 estimated job-losses in U.S. as a result of growing trade deficit with Korea that EPI believes was caused by KORUS. EPI misapplies an exports to jobs ratio developed by the U.S. government (every $1 billion in U.S. exports supports approximately 6,000 U.S. jobs) to the trade deficit. • KORUS-related quotes from Donald Trump, on the campaign trail and during his presidency (note the consistency; no moderation since taking office): a) “[Hillary Clinton] supported the job-killing trade deal with South Korea… Our exports haven’t increased at all, but their imports to us have surged more than $15 billion–more than doubling our trade deficit with that country.” Remarks before the Detroit Economic Club, August 8, 2016 b) “Hillary’s Korea deal…cost us tremendous numbers of jobs. And South Korea, like almost every other country, is laughing at how stupid we are.” Remarks at Trump for President campaign rally in Henderson, Nevada, October 15, 2016 c) “[KORUS] is a horrible deal. It was a Hillary Clinton disaster, a deal that should’ve never been made. It’s a one way street… We may terminate… We’re getting destroyed in Korea.” Washington Post interview, April 28, 2017 d) “The fact is that the United States has trade deficits with many, many countries, and we cannot allow that to continue. And we’ll start with South Korea right now. But we cannot allow that to continue.” Remarks during 1 st summit meeting with South Korean President Moon Jae-in, June 30, 2017 (Washington, D.C.) e) “[B]ecause of the fact that our trade deal is so bad for the United States and so good for South Korea, I said we’ll focus on the military. But actually, we’re going to try and straighten out the trade deal and make it fair for everybody.” Remarks at the bilateral meeting with President Moon during the U.N. General Assembly convocation, September 21, 2017 (New York, NY)
Who are Trump’s top advi visors on trade? The hey ar are n not o out utliers – they ar are hi highly e edu ducated an and w d well-versed o on n trad ade • U.S. Trade Representative Robert Lighthizer – J.D. from Georgetown University; Chief Counsel for Republicans on the Senate Finance Committee; Deputy USTR during the Reagan Administration; Partner at the Skadden law firm, where he practiced international trade law for over 30 years defending U.S. industries from “unfair” trade practices. • Stephen Vaughn, General Counsel, USTR – J.D. from Yale University; represented U.S. Steel at the Skadden law firm; became a partner with the international trade group at King & Spalding in 2016 representing U.S. producers. • Jeffrey Gerrish (nominated/no Senate committee hearing yet), Deputy USTR for Asia, Europe, Middle East & Industrial Competitiveness – J.D. from Duke University; Partner and Head of the International Trade Group at the Skadden law firm, representing U.S. clients in “fair” trade cases. • Secretary of Commerce Wilbur Ross – graduate of Yale and Harvard Business School (MBA); former Chairman and Chief Strategy Officer of WL Ross & Co. LLC with over 55 years of investment banking and private equity experience in restructuring distressed companies, including those in the steel and textile industries. • Gilbert (Gil) Kaplan (nominated/hearing held; favorable committee vote; placed on Senate legislative floor calendar; awaiting vote before the full Senate), Undersecretary of Commerce for International Trade – J.D. from Harvard University; Deputy Assistant Secretary of Commerce during the George W. Bush Administration; Partner at King & Spalding where he represents clients in “fair” trade cases. • Peter Navarro, Assistant to the President & Director of the White House National Trade Council – MPA and Ph.D. from Harvard University; Professor of Economics and Public Policy at the University of California/Irvine; author of Death by China (2011) and the Crouching Tiger (2015). • Gary Cohn, Director of the White House National Economic Council – B.A. from the Kegod School of Business, The American University; CEO, Goldman Sachs. • Kevin Hassett, Chairman, White House Council of Economic Advisors – Ph.D. from the University of Pennsylvania; Resident Scholar and Director of Economic Policy Studies at the American Enterprise Institute (AEI).
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