by Phil Eskeland

Earlier today, the Foreign Trade Division of the U.S. Census Bureau revealed the latest set of monthly trade statistics.  The September release of July trade figures gives an opportunity for a mid-year review on trends not only in goods, but also in services trade with all nations of the world, including South Korea.  In today’s release, information about 2nd Quarter services trade statistics was made publicly available. [1] 

Not only did the six-month bilateral goods and services trade deficit between the U.S. and South Korea decline by 73 percent as compared to last year, but this continues a trend that began mid-2016.  The main reason for the dramatic decline in the overall bilateral trade deficit is the sustained growth in exports of both U.S. goods and services to Korea. America’s trade surplus in services to South Korea once again expanded this year by $355 million to reach $6.4 billion during the first six months of 2018.  U.S. exports of merchandise goods also continued its steady rise, increasing by 11.1 percent over the course of the first seven months of this year, particularly in the energy sector where thus far in 2018, the U.S. has exported $2.7 billion in oil and gas products to Korea $200 million shy of all oil and gas exports in 2017.

Korea is now ranked ninth – behind countries such as France, Italy, Japan, and Mexico – in terms of nations with any significantly measurable trade deficit with the United States.  Only Korea and India reduced their overall YTD 2018 trade imbalance with the United States. However, for India, the trade deficit reduction only amounted to a modest 2.4 percent decline.

This action all took place before any changes to the Korea-U.S. Free Trade Agreement were finalized and implemented.  This demonstrates once again that South Korea is a strategic and valuable ally not just on security matters, but also on trade.  As the Trump Administration considers possible further action on trade, it is important to bear in mind that the Republic of Korea is America’s only major trading partner and ally that has taken concrete action to significantly reduce its trade imbalance with the United States.  

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own. 

Photo from Cycling Man’s photostream on flickr Creative Commons.

[1] Quarterly data on services trade is only available from 2013 onward.