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Friday, June 7, 2013
South Korea has about 49 million people, and is nine-tenths the geographic size of Virginia. Its GDP (on a purchasing power parity basis) is estimated to be $1.61 trillion.
With a democratic government, South Korea has achieved incredibly high economic growth over the past four decades, and has become the 15th largest economy in the world. It is the seventh largest trading partner of the U.S., with total goods traded (exports and imports) between the two countries exceeding $100 billion in 2012. As South Korea’s economy has developed, the U.S.-South Korea trade relationship has also become increasingly important.
The U.S. exported $42.3 billion of goods to South Korea in 2012, with our top exporting product categories to South Korea being computer and electronic products, chemicals, machinery (except electrical), transportation equipment, food and kindred products, and agricultural products.
The U.S. imported $58.9 billion of goods from South Korea in 2012. Considering the popularity of such products as Hyundai vehicles and Samsung televisions and smart phones, it is not surprising that transportation equipment and computer and electronic products are our principal importing product categories from South Korea.
The U.S.-South Korea Free Trade Agreement (often referred to as KORUS FTA) was approved by the two countries’ governments in late 2011, and put into effect on March 15, 2012. The first-year result is disappointing. According to trade statistics published by the U.S. Census Bureau, from April 2011-March 2012 to April 2012-March 2013, U.S. goods exports to South Korea actually fell from $44.6 billion to $41.3 billion, while South Korea’s goods export to the U.S. grew from $57.7 billion to $60.2 billion.
U.S. officials said this was due in part to the “slow growth in South Korea and the U.S. drought, which depressed certain crop exports.”
Signing and implementing KORUS FTA is not an end in itself, but a means of increasing trade between the two countries, creating good-paying jobs for American as well as South Koreans, and building healthy, strong economies for both countries.
This FTA provides preferential access for American manufacturers, farmers, ranchers and service providers to the South Korean market. American government officials and business managers must study South Korea’s economic and business environments carefully for the purpose of identifying new business opportunities.
To reap the maximum reward of the KORUS FTA, political and business leaders of the U.S. and South Korea need to adopt a win-win philosophy and develop systems that bolster the spirit of cooperation.
Win-win sees the world as a cooperative arena, in which one country’s economic success is not at the expense of another’s. With a cooperative attitude and a win-win philosophy, the two countries will feel good about the KORUS FTA and will be fully committed to working together closely.
The U.S. and South Korea are different in terms of their historical backgrounds, cultural traditions, political dynamics, economic policy priorities, and so on. It is natural that they would agree on some economic issues but disagree on others.
In his book “When Cultures Collide: Managing Successfully across Cultures,” Richard D. Lewis observed: “They [Koreans] trade humor with Westerners (an unusual trait in Asia), and they are quicker to decide and initiate than either the Japanese or Chinese, who regard them as inconstant. They show greater readiness to sign Western contracts than many other Asians, but evince less adherence to them if they find new partners. They are proud of their ability to work harder than the Japanese and being able to outperform them in certain industries.”
The KORUS FTA marks a new chapter of economic relationship between the U.S. and South Korea. Both countries’ governments and businesses should strive to take full advantage of the opportunities created by this bilateral agreement. The economies of both countries stand to benefit from freer, faster growing and more balanced and sustainable trade between them.
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