Unable to strike a trade agreement, President Obama and South Korean President Lee Myung Bak ordered negotiators back to work today to try and resolve disputes about new rules for cars and beef, and Jeffrey Bergstrand, finance professor at the University of Notre Dame, says a new deal would substantively benefit both countries.
“The U.S. currently has an $8 billion trade deficit with South Korea, likely due to an undervaluation of its currency,” Bergstrand says. “An agreement likely would lead to more dialogue and pressure South Korea to let its currency float more. South Korea exports $38 billion to the U.S., and we export about $30 billion to them.”
Bergstrand’s research shows that the typical free trade agreement between two countries boosts both countries’ trade by about 100 percent over 10 years time from implementation. Moreover, the jobs created in the U.S. by more exports tend to be higher-paying jobs for workers, leading ultimately to higher standards of living overall.
“The proliferation of agreements throughout the world over the past 20 years is ongoing, and without fostering agreements with major trading partners such as South Korea, the U.S. could potentially be left behind the curve.”
Bergstrand’s research on estimating the effects of free trade agreements on nations’ trade was recognized as one of the top 20 most-cited papers published in the Journal of International Economics 2005-2009.
One of the world’s foremost experts in international trade, Bergstrand has been a finance professor in Notre Dame’s Mendoza College of Business for more than 20 years and a research associate of CESifo, an international network of researchers based in Europe. His research on international trade flows, free trade agreements, foreign direct investment, multinational firms and exchange rates has been published in more than 50 articles in such journals as the American Economic Review. Media advisory: Bergstrand’s remarks may be used in whole or in part. He is available for interviews and can be reached at 574-631-6761 or Bergstrand.firstname.lastname@example.org