Trade Pattern between developed(the U.S.) and developing(South Korea) Term Paper

Trade Pattern between developed(the U.S.) and developing(South Korea) countries - Term Paper Example Even though the U. S has a trade discrepancy with South Korea, it has had a reliable trade surplus of approximately $2 billion to $3 billion in agricultural goods (Carbaugh 213)1. South Korea is the tenth greatest economy in the globe, with a yearly annual GDP fast approaching one trillion US dollars (Todaro 314)2. While it was the seventh biggest export market for the US in 2004, U. S was South Korea’s third largest trading partner and the second largest export market in 2005. In addition, South Korea is the fifth biggest market for the U.S agricultural export and the United States provides more than one fifth of South Korea’s agricultural imports. This paper looks at the characteristics of the United States-South Korea bilateral trade and offers an overview of the tariff reduction as well as elimination schedules of the two countries (Eckes 311)3. Characteristics The main mode of the US-South Korea mutual trade has moved from inter-industry trade to intra-industry tra de. Specifically, the trade model was inter–industry trade on the foundation of divergence in resource donations before 1994. The US exported intensive and natural resource-founded industry goods and technology, as well as capital-concentrated products to South Korea and imported labor-concentrated goods from that nation (Buckley et al. 341)4. Nevertheless, intra-industry trade between the two nations has increased notably in the high technology product sector since 1995. A key rise in trade of high-technology goods between the two nations shows the surge in bilateral intra-industry trade founded on good differentiation. The two nations have also raised their bilateral trade in differentiation mid-technology goods. Comparisons between trade volume and trade surpluses, by sector, can offer insight on bilateral trade patterns between the two nations. In this paper, US-Korea bilateral trade is looked at in six sectors. Agriculture and food, natural resource based industries, tex tiles, mid technology goods, high-technology goods among others. The sectors are determined on the basis of standard international trade classification two-digit code. The agric-food sector includes primary agricultural goods and processed food (Lo?pez 648)5. The natural sector comprises of gas, coal, wood and petroleum products among others. The mid section comprises of fertilizers, chemical materials, non-ferrous metals as well as furniture. The high-tech section has machinery, scientific instruments and transport instruments. The others comprise of the transaction services. The US has trade surpluses and South Korea is in the food and agriculture sector, and until lately, the natural resource-based industries. The US has a trade deficit and South Korea in the high technology section, which has grown with time. The US also has a trade shortage with South Korea in the textile section; however this deficit has declined with time. Indeed, both US imports and exports of textile produc ts have declined ever since 1990, owing to the third country impact in the market. Since other nations like Thailand, China, Indonesia, as well as Latin American nations have become very competitive in the manufacture of textile products, both the US and South Korea have raised their imports of these commodities from these nations. For the middle-technology section,