U.S. economist urges Korea, Japan to aid exporters

On Sept. 11 (local time), Dean Baker, senior economist at the Center for Economic and Policy Research (CEPR), made the claim in a post on the think tank’s website titled “Korea and Japan should give money to their own exporters rather than to Trump.”

Baker argued that South Korea and Japan are trying to provide $350 billion and $550 billion, respectively, to ensure Trump’s desired investments in exchange for lowering U.S. tariffs on their exports from 25 percent to 15 percent, adding that if the specific deal terms resemble what President Trump has described, accepting the agreement would be unwise.

The economist emphasized that the point is clear even with a simple calculation, comparing the countries’ export figures. Last year, Japan exported $148 billion in goods to the U.S., and the additional tariffs are expected to reduce exports by about $14 billion. In other words, supporting $550 billion to protect $14 billion in exports is not a favorable deal.

"South Korea is expected to see a reduction of roughly $12.5 billion out of $132 billion in U.S. exports last year, making it hard to understand paying $350 billion to protect this,” Baker noted.

“The serious problem with President Trump is that he is not bound by any deal. He could demand even more money,” the CEPR economist also said. “Even if only one-20th of the amount Trump is asking for were used to support domestic workers and companies affected by reduced exports to the U.S., the countries could secure a far more advantageous position.”


Woo-Sun Lim imsun@donga.com