Policy Commentary January 22, 2012
Four and a half years after the agreement between the U.S and Korean governments, the U.S.-Korea Free Trade Agreement (KORUS FTA or KORUS) was finally ratified by both the U.S. Congress and the Korean Parliament in late 2011 and is likely to be implemented early this year. At present, the United States has FTAs in force with 17 countries. President Barack Obama also signed free trade agreements with Colombia, Korea and Panama on October 21, 2011, but these agreements have yet to be implemented. The KORUS agreement is the most important free trade agreement for the U.S. since the North American Free Trade Agreement (NAFTA) that came into force in 1994.
With $3.3 trillion in 2010, international trade accounts for 23% of the $14.5 trillion U.S. economy. U.S. exports supported an estimated 9.2 million jobs in 2010, up from 8.7 million in 2009. (Johnson, 2011) Despite sluggish U.S. economic growth between 2003 and 2010, export-related jobs increased by over 3 million during this period. For every billion dollars of exports, over 5,000 jobs are supported in this country. That is why President Obama issued an executive order on March 11, 2010, creating the National Export Initiative (NEI), which aims to double U.S. exports over the next five years creating 2 million new jobs here at home. The NEI recognizes that exports will play a critical role in promoting American economic growth. In particular, exports play an important role in supporting a healthy and vibrant manufacturing sector. The nearly 3.7 million manufacturing jobs supported by exports account for 27% of all employment in the manufacturing sector. In this connection, free trade agreements play a critical role in promoting American exports and job growth.
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By Yoon-shik Park, Professor of International Finance, the George Washington University
