TY  - JOUR
AU  - Russ, Katheryn N
AU  - Swenson, Deborah L
TI  - Trade Diversion and Trade Deficits: The Case of the Korea-U.S. Free Trade Agreement
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 25613
PY  - 2019
Y2  - February 2019
DO  - 10.3386/w25613
UR  - http://www.nber.org/papers/w25613
L1  - http://www.nber.org/papers/w25613.pdf
N1  - Author contact info:
Katheryn Russ
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Fax: 530/752-9382
E-Mail: knruss@ucdavis.edu

Deborah L. Swenson
Department of Economics
University of California, Davis
Davis, CA 95616
Tel: 530/752-1569
Fax: 530/752-9382
E-Mail: deswenson@ucdavis.edu
M1  - published as Katheryn Russ, Deborah Swenson. "Trade Diversion and Trade Deficits: The Case of the Korea-US Free Trade Agreement," in Shin-ichi Fukuda, Takeo Hoshi, and Fukunari Kimura, organizers, "Globalization and Welfare Impacts of International Trade" Elsevier, Journal of the Japanese and International Economies (2020)

M3  - presented at "27th NBER-TCER-CEPR Conference", July 27, 2018
AB  - We study whether tariff preferences conferred on South Korean goods through the implementation of the Korea-U.S. Free Trade Agreement (KORUS) drew U.S. import demand away from other U.S. trading partners through the phenomenon known as trade diversion. In the two years following the implementation of KORUS, trade diversion was particularly strong for U.S. imports of consumption goods and for trade partners who already had free trade agreements with the U.S. Our estimates of trade diversion sum to $13.1 billion in 2013 and $13.8 billion in 2014. Notably, these estimates of trade diversion are roughly of the same magnitude as the increase in the U.S. bilateral goods trade deficit with South Korea. Thus, while increased U.S. imports from South Korea may have increased the U.S.-South Korea bilateral trade deficit, the fact that KORUS diverted U.S. import demand away from other trading partners implies new U.S. imports from Korea stimulated by the KORUS did not expand the overall U.S. trade deficit.
ER  -