History of trade is helpful in setting future policy

When the phrase "biggest trade deal since NAFTA" is used to describe a proposed trade pact, Americans better take a second look.
The Bush administration announced Monday that it has reached a free trade agreement with South Korea. Backers of the agreement say it would produce an annual increase of 29 billion in the current 78 billion of trade between the countries.
Americans should be wondering about the bottom line for the United States.
A comparison to NAFTA is not particularly encouraging. That agreement between the United States, Mexico and Canada was supposed to be a win-win for the United States. But the latest trade figures don't live up to the hype.
Some of the numbers
The year 2006 was the fifth in a row that the United States registered a record trade deficit. The United States imported 765.3 billion more than it exported. The largest single deficit was 232.5 billion, which was with China. Coming in third was Canada, with 72.6 billion, and in fourth was Mexico, with 64.1 billion.
Overall trade between the North American nations has grown under NAFTA, but so has the trade deficit for the United States.
At 13.4 billion, South Korea was in 16th place in the 2006 list of countries with which the United States had a trade deficit. That's a commentary in itself, when the country that ranks as low as 16 on the list is selling 45.8 billion worth of goods in the United States while buying only 32.4 billion.
Unless the United States is guaranteed that its exports to South Korea will represent the lion's share of the 29 billion increase in overall trade, the new agreement will be little more than reminiscent of an old joke. You remember, the one about the guy who was making widgets for 1.25 and selling them for 1. "But how do you make a profit?" his friend asked. "Volume!" was the reply.
Increasing the amount of trade does the United States little good if all it does is shift some of the deficit from No. 1 China or No. 2 Japan to No. 16 Korea without reducing the total.
The agreement was reached hours before a deadline Sunday, giving the administration 90 days to convince Congress to approve it. The president's authority to enter fast-track trade agreements expires July 1.
Once the agreement is submitted to Congress, it must be voted up or done. No amendments are permitted.
Senators from some beef producing states have already said they won't support the agreement in its present form because it does not lift South Korea's ban on the importation of American beef, which was put in place during a mad cow disease scare.
Detroit sees danger
And support from auto-producing states is questionable. The Detroit News reported that U.S. Rep. Sander Levin, the Michigan Democrat who oversees trade on the House Ways and Means Committee, said he'll oppose the deal unless changes are made. And U.S. Sen. Debbie Stabenow, D-Mich., said she "will do everything in my power to defeat this agreement."
While the agreement would remove the 2.5 percent tariff on Korean cars entering the U.S. market and, over 10 years, the 25 percent tariff on trucks, it does not, U.S. carmakers say, remove the various barriers that Korea has built to discourage the import of foreign cars. Last year, U.S. automakers and their foreign brands sold 7,165 vehicles in South Korea. Korean automakers sold about 1.2 million vehicles at home and 800,692 cars and trucks in the United States.
Detroit and union officials have warned that if the truck tariff were dropped, automakers from other countries could use South Korea as an export base to attack Detroit's most profitable market segment.
The biggest winners appear to be U.S. entertainment companies, which gained tougher copyright protections, expanded access for television programming and the right to purchase as much as a 100 percent share of South Korean content providers.
How good a deal is that? Congress will decide.