Was the KORUS FTA a Horrible Deal?

Hyeongwoo Kim (), Madeline H. Kim, Divya Sadana () and Jie Zhang

No auwp2022-02, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: Donald Trump claimed that the free trade agreement with Korea (KORUS FTA) was a horrible deal because the U.S. trade deficit increased substantially after the agreement went into effect in March 2012. However, similar deteriorations occurred during the same period in the U.S. trade balances with most other major trading partners, even though none of them had an FTA with the U.S. We investigate the causal effects of the KORUS FTA on the trade account balance between the U.S. and Korea via the difference-in-differences approach. Our empirical analysis provides strong evidence in favor of Trump's claim, controlling for potential impacts of economic fluctuations over time.

Keywords: KORUS FTA; Trade Deficit; Difference-in-Differences; Causal Effect (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-int
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Working Paper: Was the KORUS FTA a Horrible Deal? (2024)
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