U.S. Administration Argues FTA Would Help Reduce Chinese Imports

“The Korea-U.S. Free Trade Agreement will help America reduce the volume of Chinese imports.”

As the Bush administration puts pressure on Congress to approve the FTA with South Korea, U.S. Commerce Secretary Carlos Gutierrez introduced a new angle to the issue.

In an interview with Reuters on Feb. 19, Gutierrez said that the FTA would be a great opportunity not only to induce price competitiveness of Chinese imports but also to diversify American businesses abroad.

Regarding potential legislation that would seek to place tariffs on increasing Chinese imports, thanks to China’s cheap currency, he said that U.S. protectionist measures would only elicit a negative response from China and ultimately be unbeneficial for everyone.

He also explained that the KORUS FTA would be a positive solution to the trade imbalance with China as the trade agreement would induce price competition between Korean and Chinese goods. Korean products would increase its share in the U.S. market thanks to reductions in tariffs.

The commerce secretary added that the FTAs with South Korea, Colombia and Panama would bolster economic growth by expanding U.S. exports.

Meanwhile, at a seminar hosted by the Washington-based think tank American Enterprise Institute, Marcus Noland, senior fellow at the Peterson Institute of International Economics, said that if the U.S. Congress fails to ratify the FTA this year, the future of KORUS FTA would not be bright.

sechepa@donga.com