Korea trade: More than just imports and exports

More heat than light has been generated over the past several months in the national discussion about the U.S.-Korea trade relationship. Free trade agreements have borne the brunt of the criticism, and some of their lesser-known benefits have been ignored. While total U.S. goods and services exports to South Korea have grown since the implementation of the Korea-U.S. Free Trade Agreement (KORUS FTA) by 4.7 percent to $64.9 billion, there is another under-reported fact that demonstrates the deepening economic ties between these two close allies.

Trade is more than just a simple measurement of imports and exports. Increased investment flows show a growing maturity and confidence in the economic relationship between two nations. Earlier this summer, the U.S. Department of Commerce released new statistics regarding the amount of foreign direct investment by overseas firms into the United States. The U.S. still remains the top country destination of choice for investment by foreign companies. Last year, there was $3.1 trillion of cumulative foreign direct investment in the United States, with a record $348.4 billion entering this country in 2015.

{mosads}South Korea now has a record-high level of $38.2 billion currently invested in companies in the United States, representing an increase of $3.4 billion from 2014. In fact, South Korea has the rare and notable distinction of not only being one of the top 15 sources of investment into this country but also the fifth fastest growing source of foreign direct investment into the United States. The compounded annual growth rate of investment by Korean firms into the U.S. has exceeded a whopping 17 percent. 

These are companies that many Americans are familiar with: Hyundai and Kia have automobile manufacturing plants in Alabama and Georgia, respectively, and Samsung has a semiconductor plant in Texas, employing thousands of American workers. There are other Korean firms as well that may not be as familiar to most Americans: CJ Bio in Fort Dodge, Iowa, and Doosan Infracore in Bismarck, N.D. In fact, in recent years, most of the investments into the United States from South Korea have come from less well-known Korean firms. These Korean companies either built new plants on undeveloped land or invested in older facilities that could have been closed, thus creating or sustaining economic opportunity for dozens of communities all across America, including in many small, rural places in “fly-over” country.

According to the latest information from SelectUSA, an office within the Department of Commerce, U.S. subsidiaries of South Korean firms employed 45,100 Americans and contributed more than $24.9 billion to U.S. exports in 2014. In addition, the Bureau of Economic Analysis at Commerce estimates that the annual compensation of U.S. employees at Korean-owned firms has resulted in an estimated $4.1 billion in direct benefit to the U.S. workforce.

So the next time you hear about the KORUS FTA, think about $4.1 billion filtering through the U.S. economy via the pockets of over 45,000 workers in dozens of cities and towns all across this great nation who are now gainfully employed, all because of investment by Korean firms into America. By keeping our markets open to trade and investment, we keep America’s economy strong. 

Eskeland is the executive director of the Korea Economic Institute of America, a not-for-profit educational organization partnered with the Korea Institute for International Economic Policy, a public policy research institute funded by the Government of the Republic of Korea.