Following up on Kevin Gallagher’s Triple Crisis post on the proposed US-China investment treaty, Gallagher has outlined in a recent column in The Guardian how the pending Korea-US Free Trade Agreement would prevent the Korean government from doing precisely what it is now doing to manage the financial crisis: control the flow of foreign currencies.
“South Korea will join the growing group of nations that have recently resorted to currency controls in the wake of the global financial crisis. As a rash of new research has shown, such controls are legitimate tools to prevent and mitigate financial crises.
“Yet if the pending South Korea-US free trade agreement that the US just agreed to expedite at the G20 meetings had been ratified by now, South Korea’s actions would be deemed illegal.
“As the Obama administration works to put Bush-era trade policy behind and forge a ’21st century trade policy’ it should fix this flaw that could be fatal to South Korea’s financial stability….”
Read the full Guardian column.
The lack of coherence between US trade policy and the economic consensus in the wake of the financial crisis is growing more marked with the Obama Administration’s odd insistence on trying to push through unpopular (and poorly crafted) trade agreements.