Korean War in the 1950s brought
the Americans to the Korean shores, and the split of North and South Korea was
the major casualty. After Armistice of 1953 American businesses almost invaded
South Korea with their style of capitalism and rapidly transformed her as an East
Asian Tiger. For quite some decades the trade between USA and Korea was
lopsided in favour of America.
Things changes fast in the 1980s as South Korea set in motion a business strategy of producing low cost but high efficiency industrial and automotive products. Consequently South Korea effectively took the upper hand, and trade surplus tipped in Korea’s favour, spearheaded by the cars that rolled out from her factory with destination tags to the UA shores.
A kind of free trade agreement was initialled in 2007 and later 2012 to reduce the trade deficit that has put America in pains. It was correctly pointed out that South Korea under the protection of nuclear umbrella and by the stationing of more than 28,000 US troops had lessened its security worries across the ocean with China and to the contiguous north with North Korea.
By September 2018, Donald Trump signing revised trade agreement with his counterpart Moon Jae-in with the expectation on the American side “to do business under stable condition”, euphemistically implying shrinking trade surplus of South Korea, ended as pipe dream. American’s love for the South Korean cars could not be easily tamed.
As it is South Korea became the 6th largest export market for America with a two way trade flow totalling 168.6 US$ Billion. Significantly it was the trade in goods that rattled America. Here is the bird’s preview of the trade picture.
Goods
USA Exports to South Korea, US$ 56.5 Billion
USA Imports from South Korea, US$ 77.5 Billion
Goods trade deficit in favour of South Korea, 21.0 Billion
Services
USA Exports to South Korea, US$ 24 billion
USA Imports from South Korea, US$ 10.6 Billion
Service trade surplus in favour of USA, US$13.4 billion
Overall
USA Exports to South Korea, US$ 80.5 Billion
USA Imports from South Korea, US$ 88.1 Billion
Overall trade deficit in favour of South Korea, US$ 7.6 Billion
Major strength of South Korea is the manufacturing and exports of Automobile vehicles including those brands of Hyundai, Kia and the GM & Chevrolet brands under licence.
On the services side USA beats South Korea simply because of the intellectual property rights payments along with and transport, insurance and financial services, not to forget about burden sharing of stationing of US troops in South Korea!
Cheers!
Muthu
Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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