A new Commerce Department report last Friday shed light on potential good news for the US economy and its trade deficit, showing that overall US exports increased while imports were down. As MetalMiner continues to digest the report, we’re also beginning to investigate the implications of the KORUS Trade Agreement between the US and South Korea on the metals industry.
According to the report and corresponding fact sheet, U.S. exports of goods and services increased by 3.2 percent in October 2010 to $158.7 billion since September 2010, while imports decreased 0.5 percent to $197.4 billion over the same period. This means the monthly U.S. goods and services trade deficit decreased by 13.2 percent to $38.7 billion when compared to September 2010. Industrial materials and supplies were primary drivers for both the increases in exports and decreases in imports.
Putting a spotlight on the KORUS agreement, manufactured goods made up 81 percent of U.S. merchandise exports to Korea in 2009. Semiconductors and other electronic components were the largest manufactured export category, with $3.0 billion, or 10 percent of total U.S. shipments of merchandise. Aerospace products and parts accounted for $2.0 billion, while industrial machinery accounted for $1.3 billion.
After the most recent agreement between the Obama administration and the South Koreans on Dec. 6, critics in both countries were unhappy, citing concerns for their respective manufacturing sectors. The United Steelworkers union and the United States Business and Industry Council said the U.S.-Korea Free Trade Agreement would benefit South Korea’s interests at the expense of U.S. manufacturing, as reported in a Crain’s publication. “The final agreement will result in increased access to the U.S. market for Korean producers with insufficient assurance that the closed South Korean market will sufficiently open up to our auto exports and other manufactured goods, the USW union is quoted as saying. On the other end, South Korea’s Democratic Party also denounced the deal as humiliating and treacherous, preventing “South Korea’s access to the US auto market, which should be a key pillar of the FTA, reported by The Business Times.
Please check back in this week, as we continue looking into how metal buyers and sellers perceive the trade situation between the US and Korea, and how reductions of tariffs on both sides help or hurt their respective bottom lines.