Symposium at the Korea Society (NYC): The Perils of Protectionism: Korea’s Investment Challenge

On February 25, 2009, Henry Seggerman-who manages the successful Korean International Investment Fund, was the guest speaker at a Korea Society (based in New York City) symposium entitled The Perils of Protectionism: Korea’s Investment Challenge. He is also a noted columnist for the Korea Times and a contributor to other noteworthy publications such as the Wall Street Journal and the Far East Economic Review.

The discussion went off to a promising start. Seggerman began with a brief historical review of the infamous Smoot-Hawley tariff bill which U.S. President Herbert Hoover signed into law over the objections of over a thousand economists nationwide. It dramatically raised tariffs above what already existed-on thousands of imported goods and is often blamed for igniting the trade war that subsequently caused the collapse of world trade, further exacerbating the Great Depression. At this point, I thought he should have continued by indicating that the law was later in repealed in 1934-and followed it up with an expanded discussion on the need to maintain access to worldwide markets and the efforts being made to prevent trade wars from recurring-especially through channels such as the G.A.T.T. (General Agreement on Tariffs and Trade), bilateral trade negotiations, and the World Trade Organization.

Instead, Seggerman quickly turned to more recent events such as the 2008 controversy over the sale of American beef in South Korea and the mass protests over false allegations in the Korean media that these imports put citizens at greater risk for Mad Cow disease. He made an excellent point by linking this nationwide hysteria to Korea’s beef producers who have a virtual monopoly on the market and thus could charge five times the world market price for their products. Seggerman took note of how these attitudes and policies have led to a decline in foreign investment in Korea-which is sorely needed at a time when the country is struggling to maintain its economic status. He also touched on the current state of “free trade” treaties and correctly pointed out that certain products are often excluded to protect politically-favored industries-such as beef, in Korea.

On the other hand, I thought his comments about the American auto industry were just a little too harsh, even though I agree that the Detroit automakers and their unions are largely responsible for their problems and I am generally opposed to billion-dollar bailouts of the magnitude that they are seeking.

Seggerman should have stayed an course by perhaps examining the historical background of economic development of South Korea with a critical look at the popular view that protectionism was largely responsible for its success, especially with the rise and domination of the Chaebols-or large corporate conglomerates. Instead, I thought he went in the wrong direction by delving into the politically contentious and sensitive topic of U.S. immigration policy-taking a one-sided position that appeared to favor an “open borders” viewpoint while demonizing opponents in the media such as Pat Buchanan and Bill O’Reilly-by highlighting controversial statements or by showing emotionally-charged incidents such as the recent report of a racially-motivated murder of an Ecuadorian immigrant. Seggerman’s premise was to somehow equate those two issues together: in other words, to favor immigration restriction can be just as bad as supporting trade protectionism.

However, I believe that to be a simplistic and misleading notion that ignores the complex factors that separate these two issues. Seggerman appeared to have basically ignored the fact that there are legitimate concerns and arguments against the immigration policy that he advocates; he is in favor of legalizing the status of what could be perhaps as many as twenty million undocumented aliens living in this country, for instance. One could argue that these people help the economy by working at menial jobs that so many U.S. citizens often reject, but that flies in the face of current economic reality with millions of Americans out of work and desperately seeking whatever employment is available. Others have pointed out that undocumented aliens also avail themselves of certain free, taxpayer-funded services (e.g. including some that are related to healthcare, free primary and secondary public education for their children, and whatever else they can obtain) -which may offset whatever economic benefit they provide the country. In accordance with current rules and guidelines for federal and state assistance, legalizing their immigration status means that the government must provide access to a host of government-subsidized social programs since most of these people-particularly those with low-income status, would undoubtedly qualify on the basis of need. That would require increased funding and the likelihood of higher taxes to pay for them. Given these and similar concerns, it is not surprising that many Americans have reservations about liberalizing immigration policy as proposed by Seggerman.

All in all, there were substantive points made during this symposium, but I thought that injecting the subject of immigration into a time-constrained, limited discussion on trade protectionism, was not appropriate. Although I do not believe that any reasonable person would support extreme measures such as blanket restrictions on immigration, neither do I think that the alternative has to be an “open borders” policy, either. At any rate, this was not the proper forum for such a discussion.

If Seggerman had stayed on topic and just emphasized the U.S.Korean trade relationship, global trade in general, the consequences of protectionism, along with perhaps a look the historical background and recent U.S. trade policy with Asia (which he neglected to mention), I think the symposium would have been much more effective and informative. Seggerman could have made a much better case against protectionism and promoted the cause of free trade by limiting discussion to just those issues.

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