Bush administration and the Korean economy

How will the inauguration of the Bush administration affect the Korean economy? The answer is that the power change will not cause a sudden shift in Washington¡¯s external economic policy.

President-elect George Bush does not hold significantly different views from the Clinton administration on the nation¡¯s major economic policies, including the free trade system, the World Trade Organization (WTO) and multilateral trade system and support for China joining the WTO. However, it is expected that the Bush administration will adopt slightly different foreign trade policies and attitudes toward Korea due to the difference of its power base.

One of the biggest power bases for the Republican Party is farmers. As a result, U.S. pressure on Korea to open its agricultural product market will become stronger. As Bush once advocated the removal of trade barriers on genetically modified farm products while he was serving as a state governor, the two countries are also expected to confront each other over this issue. Given that one of Bush¡¯s campaign promises was to strengthen the anti-dumping system, Korea may also suffer considerable trouble exporting goods to the U.S. market. However, Korean firms active in the United States remained optimistic and said that as the president-elect shows external trade policies similar to those of the Clinton administration, Korea would see few difficulties in exporting goods to the United States in the future. Experts expected that Bush would deal with trade issues with Korea in a larger dimension by linking them with political policies on the Korean Peninsula and Northeast Asia. Therefore, they predicted, U.S. regulations on Korean export items will be eased, compared with those of the Clinton administration.

Regarding the Korean won¡¯s exchange rate with the U.S. dollar, the likely prospect is that the strong-dollar policy would continue as a chief economic advisor to Bush is an advocate of this approach. An official of the Korea International Trade Association also said that U.S. economic conditions would not undergo wide-ranging shifts immediately with the inauguration of the new administration.