Recently there has much much ado about the trade agreement between the US and South Korea. Unfortunately an egregious error is being made by many people who have called the deal a “free-trade” agreement. It is anything but.
Merriam-Webster dictionary defines ‘free’ as “having no trade restrictions” and “not obstructed, restricted, or impeded.”
Instead of standing up for true free trade, one that eliminates all impediments to an open flow of goods and services, the South Koreans gave in to President Obama and his union cronies’ demand for protectionism. This deal has nothing to do with free trade and everything to do with protecting American auto makers from foreign competition. The deal lowers export tariffs on American-made vehicles from 8% to 4% while the 2.5% tax on imported Korean-made cars, originally set to expire immediately in the Bush-era version of the agreement, is allowed to remain. Itl also cuts the entire 10% South Korean tariff on American trucks while maintaining the whopping 25% tariff on imports of South Korean trucks.
Speaking about the deal, President Obama said that “this agreement shows the U.S. is willing to lead and compete in the global economy.” If American automakers were willing to “compete in a global economy” they would not support barriers that prevent their competitors from selling their goods at a cheaper price in their backyard. It is precisely because they are unwilling to compete that they seek to stifle the competition by installing impediments to competition.