It is not unfair trade agreements that are to blame for United States’ trade deficits. Rather it is consumer choices.
That was the stance adopted by European Trade Commissioner Cecilia Malmström in an interview published by South Korean newspaper Dong-a Ilbo on Wednesday 20 September on the eve of her travelling to Seoul to take part in the ministerial meeting of the ASEM countries. She argued that the Donald Trump administration in the United States is wrong to blame the South Korea-US free-trade agreement for American trade deficits and to call for revision of the agreement.
“US companies should ask themselves why they exported fewer cars to Korea. We should not forget that trade balance shows only a very small part of the big picture”, she said, making the point that transactions by Korean companies, which are integrated into the global value chain by investing heavily in other countries including the US, the EU, Southeast Asia and China, are not captured in the statistics of the trade balance between South Korea and the United States.
The trade balance does not show the whole picture of trade results of both countries. Unlike the Trump administration, “the EU does not see that a country with a trade deficit made a loss and a country with a trade surplus won”, she went on to say. “'We do not see trade in a plus-minus way but as a growth of the sum”, she insisted.
The Trump administration is working to re-adjust US trade policy, targeting the countries with which the US has a trade deficit, such as Canada and Mexico, its partners in the North American free-trade agreement (NAFTA), China, South Korea and some EU economies, including Germany, France and Italy (see EUROPE 11760). (Original version in French by Emmanuel Hagry)