The income standards limit is set by the experience of human development on the minimum needs covered by the income. In the general lyceum of prevailing prices can be represented by average per capita income or average income groups.
1. Coefficient of Anand and Sen: This is one of the most talked about economic welfare after several attempts by the development experts (Anand and sen) In 1999, their efforts culminated in a long-term formulation to determine the level of well-being, and can be explained by the following relationship:39 A-S= Log Y min – Log/ Log Ymin Log Ymax
If:
A-S= Welfare factories A-S<1
Yi = Average income or expenditure per capital Ymin = Minimum income
Ymax = Maximum income limit
In the light of previous theories, the relationship between economy and well- being is close that well-being is linked to development and increased standard of living among individuals showing that the relationship is causal. From this portal, we will see the impact of the Free Trade Agreement between South Korea and the United States on the economic and social well-being of South Korean society.
Through chapters 4 and 5, the causal relationship will be analyzed through digital statistics that show the increasing income of individuals and the level of local and national income affects the well-being of all its community components.
January 5. Unlike the situation with the North American Free Trade Agreement (NAFTA), neither country wants to revisit the entire agreement. Instead, the US and Korean goals are to revise specific commitments using existing amendment procedures of the KORUS FTA. On the other hand, the two sides are far apart on what should be done or discussed. President Trump has threatened to scrap the pact if negotiators do not rebalance the deal and reduce the US trade deficit with Korea.
US officials have asserted that the large US merchandise trade deficit with Korea is ipso facto evidence that the agreement has been unfair to the United States.
Accordingly, American negotiators are insisting that the agreement enables the United States to export more to Korea. Korean officials disagree, however they have agreed to negotiate amendments to the KORUS FTA.
A quick look at the most recent trade data indicates that US concerns about the bilateral deficit are exaggerated. US trade with Korea is substantially in balance with the notable exception of the auto sector. The overall US trade deficit, goods and services, is less than $12 billion and sharply down from the 2016 level (see table 1). In 2017, US goods exports rose 15 percent and the merchandise deficit fell by 21 percent compared to 2016. The major imbalance is the bilateral deficit in autos and parts, which dropped $2 billion but still recorded a sectoral deficit of
$21.5 billion—equal to about 98 percent of the US goods deficit with Korea.40 It is clear that the US side expects Korea to make most of the changes and does not intend to amend the provisions requiring changes in US law. For this reason, U.S. officials have not followed the notification, consultation and reporting requirements necessary to respond quickly to the executive legislation of the revised Trade Promotion Authority (TPA) agreement.
40Williams, B.R. (2012), Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis, CRS Report for Congress.
Table 2-1. US trade with Korea (billions of dollars)41 US trade with Korea (billions of dollars)
2016 2017*
US goods
Exports 42.7 48.9
Imports 70.4 70.8
Balance -27.7 -21.9
US services
Exports 21.1 21.8
Imports 11.0 11.3
Balance 10.1 10.5
Total US trade balance -17.6 -11.4
Data for January-September at annualized rate.
Regardless of the desire to reverse the commodity trade deficit, what the U.S.
negotiators want to fix in the Corus talks is unclear. U.S. targets have not been publicly discussed within congressionally advisory groups. The statement issued by the two sides after the initial negotiating session noted that "the United States discussed proposals to move toward fair and reciprocal trade in key industrial goods sectors, such as automobiles and auto parts, as well as to resolve additional comprehensive and sector-specific barriers affecting exports American”. However,
41-Source: US Bureau of Economic Analysis, FT900, Exhibit 20 (Jan 2018).
balanced trade in the automotive sector is a false dream. The U.S. auto market is more than 10 times larger than the Korean market. If U.S. car sales in Korea are equivalent to the number of Korean-branded cars sold on the U.S. market (Imports and Korean cars produced in the United States), U.S. automakers will acquire a market share in Korea of 100 percent. 42
Table 2-2. US-Korea auto trade (billions of dollars)43 US-Korea auto trade (billions of dollars)
2016 2017*
US autos and parts
Exports 2.6 2.5
Imports 25.1 24.0
Balance -23.5 -21.5
Data for January-September at annualized rate.
Through this new agreement, U.S. officials pressed to resolve the problems mentioned in the 2017 U.S. National Trade Assessment report on foreign trade barriers, particularly data localization requirements. U.S. officials say Korean law imposes strict requirements on service providers seeking to transfer customer data outside Korea, preferring local cloud computing providers at the expense of Foreign Service providers. Moreover, U.S. officials are determined to reduce Korean restrictions on imports of agricultural products.
42Jassim, A., (2011), Study and Analysis of Economic Well-Being, Basra University.
Jeffrey J. Schott (2018), Fixing the KORUS FTA-Without Firew, Peterson Institute for International Economics.
43-Source: US Census Bureau, FT900, Exhibit 18
At the first special session of The Corus Trade Ministers in August 2017, U.S.
Trade Representative Robert Lighthizer asked Korea to accelerate and deepen its commitments to the Free Trade Area for Farm Liberation. Unlike automobile and data services, the efforts to liberalize Korean agricultural products behind the salient commitments made in the KORUS Free Trade Area would provoke a strong political reaction in the National Assembly, especially if the U.S. side even demanded the partial opening of the market Korean rice.
Korean officials have been pragmatic in response to US demands for additional Korean concessions without complementary US reforms. We see here one of the most important reasons for the new agreement is the realization of Korean officials that U.S. officials can only process requests for review of the Free Trade Agreement (KORUS FTA) which does not require congressional approval. Rules:
Investor-State Dispute Resolution Provisions (ISDS) and exemption of partner countries from global safeguard measures . 44
The ISDS procedures allow foreign investors to challenge unjustified direct or indirect expropriation of their investments when governments change law or regulatory practice. ISDS provisions have elicited strong opposition among legislators and civil society groups in the United States, Europe, and Korea, concerned that potential ISDS litigation could discourage regulatory reforms. ISDS provisions were a key concern of Korean critics of the KORUS FTA, though the opposition did not derail ratification of the trade pact by the National Assembly.
The Koreans probably would be cheered at home if ISDS was dropped from the KORUS FTA—and US officials might accommodate them. In the NAFTA talks, the US side reportedly proposed changes to ISDS provisions that effectively would eliminate recourse to such litigation. Korean negotiators thus may be pushing on an open door. Existing trade rules governing what are called “global safeguards”
provide temporary protection if imports cause or threaten serious injury to domestic
44Jeffrey J. Schott (2018), Fixing the KORUS FTA-Without Firew, Peterson Institute for International Economics.
industry. Under WTO rules, safeguard measures are supposed to apply to all imports, though NAFTA exempted regional partners from Canadian, Mexican, and US safeguard measures.
The KORUS FTA did not include a similar provision, and the Koreans want to add the NAFTA safeguards exemption to the KORUS FTA to preclude actions like the US safeguards measures applied in late January 2018 against Korean exports of washers and solar panels. Meanwhile, US officials are trying to delete that provision as part of the NAFTA overhaul. 45
Finally, Korean officials hope that planned purchases of military hardware and liquefied natural gas (LNG) will swell US exports and demonstrate their willingness to boost trade opportunities for US exporters. In 2016, LNG imports were valued at
$12 billion, so shifting to US suppliers for even 10 percent of their import needs would boost US exports by more than $1 billion.
Trump wants Korea to buy more US goods to reduce the US bilateral trade deficit, although he will not offer to change US policies in return for new Korean trade reforms. However, Koreans did buy more goods last year and are interested in buying more US energy products. Moreover, the bilateral US trade deficit is sharply down from peak levels in 2016—the market already has done much of what Trump wants to rebalance bilateral trade flows.46 The reasons and motives of the United States were strong in order to renegotiate the free trade agreement and change some of the provisions that came in favor of the United States.
45Jeffrey J. Schott (2018), Fixing the KORUS FTA-Without Firew, Peterson Institute for International Economics.
46 Damian, H.,(2001),South Korea signs Central American free trade deal,Business Recorder.