The trade deal with South Korea is a model for future trade agreements. What a pity that it fell to a lunatic like Donald Trump to bring it about. Credit mainly goes to Trump’s trade advisers, especially Peter Navarro and Robert Lighthizer.
The deal exempts South Korea from the steel tariffs, in exchange for an agreement by the Koreans to cut steel exports to the U.S. by about 30 percent. Past investigations have found that Korean steel is heavily subsidized.
The deal also commits South Korea to dismantle some of its many obstacles to U.S. exports of products such as cars and pharmaceuticals. And a separate agreement commits both countries not to use currency manipulation for trade advantage. What’s not to like?
Yet many commentators found it hard to get their minds around the idea that dismantling other nations’ protectionism wasn’t itself protectionist. Check out this NPR interview with Navarro.
Granted, the deal was unusual because the U.S. has more leverage with South Korea than with most nations. We are its geopolitical protector, and South Korea also needs America’s blessing or at least tacit consent as Seoul commences its own parallel diplomacy with the North. The U.S. is also one of South Korea’s most important markets.
Yet because of our huge and largely open domestic market, and a half-trillion trade deficit with the rest of the world, we also have substantial leverage with other nations to demand that they play fair, too. Other presidents have been reluctant to use that leverage.
If Trump can get this deal, just imagine what a sane, progressive president might get.