U.S. and South Korea agree to begin the process to make amendments to Korea-U.S. Free Trade Agreement (KORUS). No details are yet available on the specific changes that will be made. U.S. and South Korea plan to use the agreement’s special “joint committee” process to make changes to the agreement rather than embark on a NAFTA like re-negotiation
The Administration and the President have indicated throughout the summer their desire to renegotiate or withdraw from KORUS – with the most serious statements coming at the beginning of September.
Over the summer, a rare bi-partisan letter from Congressional leaders overseeing the Senate Finance and House Ways and Means committees called for the White House to pursue further discussions instead of pulling out of a pact with an important economic and geopolitical partner, particularly at a time of heightened tensions in the Korean peninsula. The U.S. Chamber of Commerce issued a statement opposing pulling out of KORUS.
KORUS is five years old – nowhere near as mature as the North American Free Trade Agreement (NAFTA). The U.S. currently maintains a trade deficit in good exports with South Korea. Its important to note that trade is more than exports. The U.S. also maintains a services exports surplus with South Korea. While origin-exports are important drivers of economic growth — according to the Department of Labor—it is important to note that 80% of the U.S. work-force works in the service sector.
KORUS also includes an investment chapter that is designed to facilitate bilateral investment between the U.S. and South Korea. By any measure, the United States is the net beneficiary here. Korea is the 14th largest foreign direct investor in the United States with significant new investments in the horizon. The Hyundai Motor Group, which includes Hyundai Motor and Kia Motors has stated that it plans to increase investment into the U.S. by 50% to $3.1 billion over five years and may build a new plant there. LG Electronics also is looking to increase investment by building a manufacturing facility in the U.S.
While there are opportunities to grow trade and tap into the South Korean market, KORUS agreement still has some matter to address such as issues relating to regulatory transparency, customs clearance, and regulatory overreach. Florida trade with South Korea has increased 86 percent since 2011.
Florida Chamber Embarks on Trade Mission to South Korea and Taiwan
Goal is to Enhance Trade Between Florida and These Important Trading Partners
TALLAHASSEE, FL (April 18, 2016) – To strengthen Florida’s competitive edge in the global economy, the Florida Chamber of Commerce this week is participating in an economic trade mission to South Korea and Taiwan – meeting with international leaders to continue growing trade between Florida and these important trading partners.
While there, David Hart, Executive Vice President for the Florida Chamber, will address dignitaries and business leaders and showcase the Florida marketplace. The trade mission is being led by Enterprise Florida, Inc.
According to Alice Ancona, Director of Global Outreach for the Florida Chamber of Commerce, global trade is big business in Florida. That’s because 95 percent of the world’s consumers, who also hold 80 percent of the global purchasing power, are outside the United States.
“International trade allows Florida companies to reach these consumers and helps our state create jobs and economic opportunity, and remain the global hub for trade and logistics. By joining Enterprise Florida on this Export Development Trade Mission, we are able to share why international matters to Florida,” Ancona said.
The Florida Chamber has remained committed to ensuring Free Trade Agreements (FTA) are in place to help create greater economic opportunities, that includes lobbying in Washington, D.C. for the Korea-U.S. FTA of 2012. Currently, Florida exports more than $702 million in commodities to South Korea, and imports $1.9 billion. Florida also enjoys a unique trade relationship with Taiwan that includes exporting $238 million in commodities.
“Building relationships in emerging and growing global economies is an essential tool for Florida to remain competitive,” said Jim Pyburn, Director of Business Development for Port Everglades. “Here in South Korea and Taiwan, we are getting a hands-on look at just how beneficial these relationships can be.”
Florida’s record investments in transportation and infrastructure make it the ideal place to leverage and grow trade and logistics opportunities. Consider the following:
Florida’s freight system moves 740 million tons of freight annually, including international imports and exports, domestic movements to and from other states, and internal shipments within Florida,
Air Cargo generates 36 percent of Florida’s international trade dollars,
Miami International Airport is number one in the U.S. for international freight, and
Four of Florida’s ports are considered the fastest growing in the U.S.: Miami, Palm Beach, Everglades and JAXPORT.
“International Trade is critical to Florida’s global economy, and our freight infrastructure is a key asset in attracting that trade to our state,” said Doug Wheeler, President and CEO of the Florida Ports Council. “Current investments in upgrades and expansions for our state’s ports and freight corridors will ensure that Florida exports can quickly and efficiently get to countries around the world like South Korea and Taiwan.”
The Florida Chamber of Commerce is the voice of business and the state’s largest federation of employers, chambers of commerce and associations, aggressively representing small and large businesses from every industry and every region. The Florida Chamber works within all branches of government to affect those changes set forth in the annual Florida Business Agenda, and which are seen as critical to secure Florida’s future. The Florida Chamber works closely with its Political Operations and the Florida Chamber Foundation. Visit www.FloridaChamber.com for more information.
A Simple Guide to China’s Devaluation of the Yuan
China devalued the Yuan against the U.S. dollar
Why did this happen?
China devalued its currency against the U.S. dollar to make Chinese goods cheaper and boost exports after Chinese exports declined 8.3 percent in July.
What does this mean?
The Yuan is loosely tied to the U.S. dollar and has been strengthening as the U.S. economy picks up. The U.S. Fed is considering a rate hike in the near future as the U.S. economy continues to move ahead, thus further strengthening the dollar. As China is an export-oriented economy, this potential increase would put greater pressure on declining exports.
What are the impacts to the U.S.?
A cheaper Yuan will mean a decrease in U.S. exports as Chinese products will be less expensive. As other nations consider the impact of the Chinese devaluation to their exports, they too may devalue their currencies to remain competitive with the Chinese goods further putting pressure on US exports.
What are the Impacts to other parts of the world?
The Chinese currency implications go beyond the devaluation as it’s a symptom of its overall economic health as the Chinese growth engine continues to slow down. This will have far reaching implications for emerging markets that export heavily to China, particularly commodity exporters heavily dependent on China like Brazil, Russia, South Africa, Indonesia, and Malaysia. A weaker yuan is also a concern for developing nations that compete with China in exporting similar goods and services to similar destinations. Taiwan and South Korea face some of the greatest risks, but Thailand and the Philippines may also be affected and even Mexico may feel the impact of cheaper Chinese goods.
All this comes at a time when emerging markets are facing other factors and issues are affecting their growth. While larger economies are able to sustain and mitigate the Yuan depreciation, China is still the world’s second largest economy, and emerging markets which heavily depend on China are important to the overall global economy. Their health will have an impact on global markets.
What does this mean for Florida?
The Chinese currency depreciation will have an impact on Florida exports, which compete with China. Florida will need to remain vigilant to the currencies of Florida’s trading partners such as Taiwan and Korea, who are strongly tied to Chinese trade. As their currencies may weaken as well, adding to the fallout of the Chinese devaluation. The Florida Chamber’s International Program will keep you up to date as this issue unfolds.
NEED MORE INFO?
For more information on how this affects Florida’s future, please contact the Florida Chamber’s Chief Economist Dr. Jerry Parrish at email@example.com.