In Korea, Infrastructure, Consumer Spending, and Opportunities

The National Association of Manufacturers’ Doug Goudie is on a business and trade mission to South Korea. This is the second of his reports. Earlier, here.

This morning we had a breakfast meeting with Kang Man-soo, Chairman of the Presidential Council on National Competitiveness (PCNC) and a senior economic advisor to Korean President Lee. The PCNC – created by President Lee after he took office – is a unique advisory body in Korea, perhaps roughly equivalent to the U.S. Council of Economic Advisors (CEA), with an important difference: foreign business representatives have a place in at the table in the PCNC, while the U.S. CEA is entirely an inter-governmental body. Also, CEA has a wide mandate, while the PCNC is focused on ways Korea’s government can improve competitiveness in the country. Given the neighborhood –- a robust, competitive and fast-growing group of Asia-Pacific economies –- having a body like the PCNC seems a smart move.

It was a very good meeting to begin our visit, and the U.S. delegation utilized the Chairman’s time with us to highlight the benefits of the U.S.-Korea FTA for both American and Korean businesses, farmers, and service providers. The Chairman noted an op-ed in The Wall Street Journal last week stating that Democrats in the U.S. Congress ARE in fact promoting free trade – by not acting on the pending U.S. FTAs with Korea (and Colombia and Panama), Congress is promoting the European Union’s increased free trade with Korea (and Colombia and Panama), as the EU enters and completes more and more bilateral FTAs – first up, with Korea.

Korea forms a strategic “bridge” between Japan and China, and the rest of the Asian economies. As noted earlier, the Korean economy is growing quickly, showing good recovery from the 2008 global recession. I can attest that a great deal of infrastructure work is under way in Seoul and elsewhere – bridges are being built, rail lines being extended, new high-rises are rising high. I can also attest – after strolling through some of the largest markets in Seoul this afternoon – the Korean people are out in droves buying lots of consumer goods. This market is an excellent place for U.S. manufactured goods exports.

Gaining duty-free access to Korea’s large and growing market, along with the strong investment and Intellectual Property Rights (IPR) protections and removal of non-tariff barriers, is the benefit of passing the KORUS trade agreement. Once U.S. manufacturers have access to this market, we can compete directly in the rest of the Asia-Pacific region with some of our largest competitors. I’ve noted here before that, while the U.S. and EU exported about the same total to Korea in 2008- both over $30 billion – the EU exported $10 billion MORE in manufactured goods than the United States, and that gap is widening. That gap continues to widen every month that the EU has its agreement in force, and we do not.

Competitiveness is a word used very broadly, and with many different meanings. The NAM, in our recently released manufacturing strategy, has called for the United States to pursue comprehensive reforms that will make us the most competitive manufacturing location on earth – the best place to build products, research products, innovate new products, and locate headquarters. Competitiveness involves smart policies on tax, energy, education and training, legal reforms, reduction of regulatory burdens – and commitments to opening new markets for U.S. products. We might start by finalizing the discussions on autos and beef in Seoul on November 11, and then sending the KORUS FTA to Congress for approval.

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