Selling U.S.-Korea Trade Deal Calls for Common Sense

May 11th, 2011

by and


This piece was originally published by Bloomberg.

Stop us if you’ve heard this one before: The proposed U.S. trade deal with South Korea would “increase exports of American goods by $10 billion to $11 billion.”

This is how Washington policy makers and American business leaders have traditionally made the case for new U.S. trade agreements. The numbers don’t lie; they don’t always persuade, either.

For any good trade deal, there’s a strong statistical case about economic growth, exports and employment that works with market watchers, economists and policy experts.  To them, the data in support of the trade deals with countries such as South Korea, Colombia and Panama is compelling and often conclusive.

Still, data alone doesn’t cut it with the millions of Americans who are more familiar with supermarkets than spreadsheets, more worried about balancing a checkbook than a current account, and who ultimately decide our elections.

While they understand that the U.S. must compete in a global economy, they’re often unsure about what trade agreements actually do, and they don’t find high-level data or conceptual arguments for trade to be of much help in finding the answer.

To build support for new trade deals, trade supporters must not only persuade Washington and Wall Street, but must also make a case that plays in Peoria — a case that uses real-world stories to explain to Americans how trade agreements actually work, how they can benefit America’s exporters and workers and why they’re a good deal for the U.S.

Making the Case

For Americans in the heartland, the case for new trade agreements might look more like this:

Orange juice is the most popular juice drink in South Korea. Currently, Korean shoppers pay a whopping $22.32 for a six-pack of frozen orange juice concentrate from Florida. Our trade deal with Korea would slash the price to $14.49 by immediately eliminating Korea’s high import tax on American orange juice.

Juice from countries such as Brazil would continue to face Korea’s high duties. So the U.S.-Korea pact would open up significant new business for the 1,100 grower-members of Florida’s Citrus World cooperative and for other American orange growers, processors and workers.

After all, if you were a Korean shopper comparing Florida orange juice at $14.49 and a Brazilian brand priced at $22.32, which would you buy?

Dollars and Jobs

Certainly, data does matter and trade advocates have built an impressive case. Studies detail the billions of dollars in U.S. exports and hundreds of thousands of American jobs that would be supported by the pending trade deals with Colombia, Korea and Panama, and they highlight the exports and jobs that America would lose if we abandon new trade deals while countries such as China forge ahead in these markets.

And there is also compelling data that debunks common myths about trade deals. Although critics commonly assert that trade agreements contribute to trade deficits, trade data shows that America actually had a manufacturing-goods surplus of almost $50 billion with our 17 trade-agreement partners in 2008 and 2009.

To go beyond the data-speak, trade supporters must also employ a host of real-world stories that speak directly to Americans about the tangible benefits of new trade deals.

Real-World Examples

For example, in the case of the Korean trade deal:

– Ellicott Dredge Enterprises LLC, a century-old, 200- employee company based in Baltimore’s inner city, would be able to match duty-free prices of their European competitors and continue to win sales of their high-quality American-made equipment in the Korean market.

– The agreement would help MetLife Inc. sell insurance to Korean families, and support good U.S. jobs for MetLife’s insurance professionals and administrative workers.

– Eliminating Korea’s 30 percent duties on American seafood soups will assure that that Campbell Soup Co.’s Clam Chowder isn’t $1.25 more expensive than European brands in Korean supermarkets.

– Korea’s love for spicy pork, combined with duty reductions under the agreement, would create hundreds of millions of dollars in new business for America’s pork farmers.

For the U.S. economy to recover and grow, we must pursue a forward-looking trade agenda that helps our companies and workers sell to the 2 billion new middle-class consumers who will be joining the global economy in the next 20 years.

To make this happen, trade supporters need to make the case directly to America’s own middle class in terms they can understand, embrace and share. This might start with a glass of Florida orange juice and a bowl of Campbell’s soup.

(Ed Gerwin, senior fellow for trade and global economic policy at Third Way, and Ryan McConaghy, director of the Economic Program at Third Way, are authors of the new report The Korea Trade Agreement: A Good Deal for America. The opinions expressed are their own.)