Student Blog — Alexander Stephenson | Trump vs. NAFTA

The United States is facing a political climate unlike anything it has seen in recent memory northamericadue to the recent election of American businessman Donald Trump as the next president. The Trump administration will usher in a new era of American politics and bring with it policies that Washington D.C. might find radical and hard to stomach. Throughout the election, controversy over free trade and the North American Free Trade Agreement (NAFTA) rose to new heights.  America has recently endured one of the most tumultuous economic periods since the Great Depression. Citizens are passionate about maintaining growth and keeping American employment numbers climbing. President-elect Trump feels that the United States’s involvement in NAFTA is a ‘bad deal,’ because it is reducing the number of American jobs by making it possible for citizens to get their goods for less through Canadian and Mexican outlets. This paper will:  1) examine Trump’s controversial NAFTA policies and protectionist attitude; 2) inform readers on the institutional roots of American trade policy; 3) define the origin of NAFTA and why it was formed; 4) create an understanding of why free trade is so controversial; and 5) explain the possible effects to the U.S. economy and global market if NAFTA falls apart. First, the paper will discuss Trump’s current policy and how it compares to Ross Perot’s in 1992, to show similarities between the two.

President-elect Donald Trump has not gone into much detail about the specifics of his policies regarding the North American Free Trade Agreement, which is surprising considering how much controversy he stirred up on this subject during his campaign. The fact sheet on Donald Trump’s presidential website contains only two lines discussing NAFTA which state, “NAFTA will be renegotiated to get a better deal for American workers. If our partners do not agree to a renegotiation, America will withdraw from the deal” (Donald J. Trump. 2016). For such a big and important statement one would assume that there would be some concrete evidence or reason for such a claim, but there is not. On the other hand, the possibility of withdrawing has stirred up a lot of controversy and debate about whether or not the agreement is beneficial for the United States. Trump’s views on NAFTA as a presidential candidate strikes comparisons to Dallas businessman and former presidential candidate Ross Perot. During the 1992 presidential election campaign, third party candidate Ross Perot opposed the idea of NAFTA and famously described it as a “giant sucking sound” in the 1992 Presidential Debate. Perot was worried that too many American businesses would send work south of the border for cheaper production. Today Donald Trump expresses these same concerns. To address Perot’s 1992 concerns Gary Hufbauer, a Senior Fellow at the Princeton Institute for International Economics, stated in a New York Times article that Ross Perot was wrong about NAFTA sucking away jobs. He then clarified that between 1994 and 2000, the United States annually created two million jobs (Hufbauer 2013). A classic example of mythical job loss is in the automotive industry. Those of the public who believe many American automotive companies are having cars totally made in Mexico are wrong. Final assembly may happen across the border in some cases, but an average car has about 30,000 different parts and skilled technicians here are needed to engineer many sections of a car such as engines and transmissions. These sections are then shipped, already assembled, to a plant for final assembly, some of which happens in Mexico. It is important to have a full-scale picture of the process to be able to critique it. It is equally important to comprehend the reasons America decided to join NAFTA to be able to critique the action.

In order to understand why the United States agreed to join NAFTA, it is necessary to be informed on the institutional roots of America’s trade policy. In chapter 24 of International Political Economy, authors Michael Bailey, Judith Goldstein, and Barry R. Weingast explain the United States’s transition from a protectionist state to one which embraces free trade. Before President Franklin D. Roosevelt and the Democrats took control of Congress and the White House, U.S. trade policy was protectionist and partisan. Republicans were famous for raising tariffs to discourage foreign imports and/or exports. The highlight of this notion was in 1930 during the midst of the Great depression with the infamous Smoot-Hawley Tariff Act (Bailey; Goldstein; Wengast. 2010).  The Act raised tariff rates to a record 48 percent and, according to many, prolonged the Great Depression and contributed to the breakout of World War II (Bilaam; Dillman. 2014). Shortly after the Democratic Party and FDR took control of Washington, they passed the Reciprocal Trade Agreements Act (RTAA) of 1934. Bailey, Goldstein and Weingast shed light on the RTAA and explain that it allowed Congress to “delegate authority to the executive branch to reduce tariffs through reciprocal trade agreements with other countries.” So not only did this legislation create an institutional change in U.S. trade policy, but it also engendered greater bipartisan support for free trade (Bailey; Goldstein; Weingast. 2010). With Donald Trump winning the presidency and Republicans maintaining control of Congress, it is possible that the United States will revert to being a protectionist nation. To some, this might seem like the country would be taking a step back in free trade, to others a necessary step forward to protecting American jobs. This question was likely discussed at the conception of NAFTA as well, and as history shows us, free trade won the argument.

In 1991, United States President George H.W. Bush, Mexican President Carlos Salinas, and Canadian Prime Minister Brian Mulroney began negotiations for the North American Free Trade Agreement (NAFTA Now. 2016). The United States, Mexico and Canada eventually signed the treaty in 1992; however, it did not take effect until 1994 and remains controversial as to how much the members benefit (Balaam; Dillman. 2014). As a “state-of-the-art free trade agreement,” the treaty successfully opened markets between the regional powers allowing an environment beneficial to long-term investing to exist between the three countries. NAFTA has been eliminating tariff and nontariff barriers to trade and investment since it took effect. According to NAFTA’s website the agreement “sets the rules for international trade and investment” between the three member states. Highlights of the treaty address the following: market access for goods, protection for foreign investments, protection for intellectual property, easier access for business travelers, access for government procurement, rules of origin, side agreements, commitment to the environment, and commitment to labor cooperation. Specifics pertaining to these highlights can be found within the agreement’s eight sections and twenty-two chapters (NAFTA Now. 2016). Hearing these highlights might elicit questions that call into light the opposition view: why is free trade considered a ‘bad deal’ as stated by the President-elect.

Since free trade was established there have always been controversies which question the benefits of the liberal policy. It is, however, important to understand what the policy of free trade is before one can comprehend its controversies. The official definition of Free Trade in Introduction to International Political Economy is as follows: “It is one of the most popular policies advocated by economic liberals. In keeping with the laissez-faire notion that government intervention in the economy undermines efficiency and overall wealth, free trade removes protectionist measures, such as tariffs, that are designed to insulate domestic producers from international competition. It has been a major goal of most international trade institutions since 1947” (Balaam; Dillman. 2014). According to Cletus C. Coughlin in International Political Economy, most economists believe that free trade is the best policy; however, there are those of the general public who believe that free trade is not beneficial and is controversial (Coughlin. 2010). Coughlin clarifies that low income industrial workers are likely to support trade restrictions because it can improve the job environment and creates job protection. Scheve and Slaughter did a recent study explaining that the lower the skill levels of a worker, the stronger his or her support for new trade barriers. They were able to measure the worker’s skill levels by examining education levels and average occupational earnings. Coughlin explains that the public, or non-economists, struggles to understand the benefits of free trade from a broad-based gain aspect. NAFTA even recognizes the questions surrounding free trade and its own policies which is why it addresses these ‘myths vs. realities’ on its website. For example, one of the myths surrounding NAFTA is that the treaty has resulted in the loss of jobs for the three member states, when in reality total employment has grown by over 40 million jobs since 1993 (NAFTA Now. 2016). One can argue, however, that this does not tell the whole story or provide a breakdown on who is benefiting the most. One can also make the argument that advancements in technology have taken more jobs away, especially with regard to industrial workers. These facts might persuade one to be in favor of any action that claims it will bring jobs back to America, even if they do not fully understand the reparations that would cause in the American economy and the global trade market.

One of biggest questions surrounding NAFTA and the U.S. economy is whether or not it has helped create or diminish jobs in the U.S. In 2014, an article from the Wharton School at the University of Pennsylvania examined whether or not NAFTA’s benefits outweigh the costs. Two of the main arguments proposed in the article about jobs and NAFTA were conducted by Robert Scott, chief economist at the left leaning Economic Policy Institute in Washington D.C., and by management professor, Mauro Guillen, from Wharton. Robert Scott argues that “By 2010, trade deficits with Mexico had eliminated 682,900 U.S. jobs, mostly (60.8 %) in manufacturing.” Mauro Guillen argues that what those like Robert Scott fail to recognize is “that without NAFTA, many jobs that were lost over this period would probably have gone to China or elsewhere.” Walter Kemmsies, chief economist at Moffatt Nichol, an international infrastructure consultancy, also weighs in and points out that roughly 40 percent of what the United States imports from Mexico is derived from U.S. sources (the Wharton School. 2014). It is also important to note that since its creation, NAFTA has helped create a rise in U.S. manufacturing output. According to NAFTA, between 1993 and 2008 the U.S. experienced a 62 percent rise in output compared to just 42 percent between 1980 and 1993 (NAFTA Now. 2012).

Now that Donald Trump will indeed be the next President of the United States, controversy and speculation about NAFTA is higher than ever. Many American businesses are now anxiously awaiting Trump’s decision on NAFTA. Whether the President-elect can negotiate a new deal with Mexico or kills the whole agreement is causing great concern. In the scenario that the U.S. leaves NAFTA, how does that decision affect the US economy and the global market? According to an article written by Tami Luhby in CNN Money, the United States “has not withdrawn from a trade agreement since 1866,” (Luhby. 2016) which ultimately implies that abandoning NAFTA leads to navigating in uncharted waters. As the world’s resident hegemon, the U.S. can cause international havoc by setting a precedent for reducing free trade and promoting protectionist policies. By advancing protectionist policies, Trump would be opening the door for China to become more dominant in the global trade market resulting in U.S. jobs ultimately flowing across the Pacific. Compounding the problem is that China, as a global economic power, is not just an economic concern for the U.S., but also a national security concern as well. If withdrawing from NAFTA becomes a precursor to not signing the Trans-Pacific Partnership (TPP), thereby reducing access to freer trade in Asia, the U.S. risks losing its spot as a regional power and creates a window of opportunity for China to play a more dominant role. Though there remains a lot of economic instability in China, it is still too risky for the United States and the rest of the global market for the U.S. to diminish the important role it plays in maintaining regional security and freedom of the seas.

President-elect Trump has a daunting task ahead of him: to change American free trade policies. The notion that NAFTA has taken jobs away from the United States is not entirely true; it does not show the full picture of the situation. Both Gary Hufbauer and Walter Kemmsies give evidence that shows NAFTA doesn’t have great effect on the loss of American jobs. Specifically, Hufbauer states that between 1994 and 2000, the United States annually created two million new jobs. Kemmsies articulates that roughly 40 percent of what the United States imports from Mexico is derived from US sources. The free trade policies laid out by the NAFTA treaty are multifaceted, and like other complex relationships it has points that can be argued in support and in opposition of the overall concept. President-elect Trump has not clearly explained what terms he would like NAFTA to renegotiate, or how serious he is regarding his threat to back out of the agreement. One thing is for sure — this will not be the only policy that the new president and his administration are going to try to re-work, and the American people have a responsibility to stay informed and hold President-elect Trump accountable.


alexstephensonAlexander Stephenson transferred to SMU in 2015 to major in political science. In 2012 he took a gap year to work in Opposition Research at the Republican National Committee (RNC) for the Mitt Romney Presidential Campaign. He has interned at the George W. Bush Institute and spent his sophomore and junior years of high school studying abroad in Portugal while his father was serving there as the United States Ambassador.

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Alan Bersin | The U.S. is too intertwined with Canada, Mexico to back out of NAFTA

Alan Bersin, assistant secretary of the Department of Homeland Security, visited the Texas-Mexico Center to talk about the changing nature of borders Dec. 6.

Alan Bersin talks borders at the Texas-Mexico Center Dec. 6.

Alan Bersin, assistant secretary for the U.S. Department of Homeland Security (DHS), gave a talk Dec. 6 at the Texas-Mexico Center discussing the changing nature of borders in a globalized world.

Borders are no longer lines in the sand, Bersin said. They are flows of people and goods. They aren’t the first line of defense for a nation either. In a globalized community, “the border begins where airplanes take off.”

This means that in order to secure the homeland, the U.S. has to secure the flows of goods and people coming to the U.S. — once they reach the border it’s too late. On average, 97 to 98 percent of trade and travel is lawful. The challenge for DHS is to sort out the illicit 3 percent, to “find the needle in the proverbial haystack,” Bersin said.

He laid out three ways to find the needle:

  1. Search every piece of hay
  2. Use intelligence to locate the needle
  3. Make the haystack smaller

The DHS has elected to focus on option three: find the 97 to 98 percent of trade and travel that is legal and move it across the border quickly, making the haystack smaller. This way they can allocate resources to uncover the potentially harmful 3 percent. This is accomplished through programs like Global Entry, which allows people to give up information to the government, be classified a low-risk passenger, and quickly pass through border security.

DHS’s goal is to provide heightened security without disrupting the flow of people and goods.

Along with globalization and advancements in technology came a paradigm shift in information sharing. Nations used to hoard information in hopes of trading insights for diplomatic advantage, but in a globalized economy information sharing is essential. It allows governments to connect the dots.

Bersin transitioned to a discussion of the U.S.-Mexico relationship. He argued that NAFTA created a partnership in 1994, transforming the two countries that were once neighbors into roommates. “You can leave your neighbor, you can’t walk out on your roommate,” he said.

From the roommate perspective of NAFTA, Bersin is skeptical that the new administration led by President Donald Trump will follow through with his claimed intent to back out of the deal. He said that while there will most definitely be changes on issues like immigration, the U.S. is too intertwined with Canada and Mexico to dismantle the trade agreement.

Trump’s advisers will look at their options and find they don’t want to leave the deal. “I have great faith,” Bersin said.  Time will tell if Donald Trump defies expectations again.

Listen to Alan Bersin’s talk here:

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John McCain | “Trump retreats from trade deals at his peril”

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Tower Center Honorary Board Member Sen. John McCain wrote an editorial in the Financial Times Dec. 6.

McCain argues against withdrawing from the Trans-Pacific Partnership, saying it would make the U.S. less competitive and would compromise American leadership in the Asia-Pacific region.

“It is a fool’s errand to try to recreate a mythical time when Fortress America was impregnable, unaffected by the world’s troubles,” McCain wrote. “Instead, we should have faith in American leadership and the power of our values, including the advocacy of free trade, which have made the world and us safer, freer and richer.”

Read his article, “Trump retreats from trade deals at his peril,” here

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Josh Rovner on Trump considering Exxon Mobil CEOs for secretary of state

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Tower Chair Josh Rovner commented on rumors President-elect Donald Trump is considering present and past CEOs of Exxon Mobil for the position of secretary of state in the Dallas Morning News.

Some are skeptical of the idea, saying the CEOs don’t have enough experience outside of business to qualify them for the position.

“It could be very unusual,” Rovner said. “The only reason it might make sense has to do with the way Trump feels about international relations, that it seems always to be related to a business transaction.”

Read the full article here.

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Q&A with Sara Jendrusch | Exploring security within the commercial sex trade

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HCM Tower Scholar Sara Jendrusch traveled to London as part of her research project to work with women who had been trafficked into the sex industry.

The Tower Center sat down with Highland Capital Management Tower Scholar Sara Jendrusch to discuss her research exploring the security of the commercial sex trade. Jendrusch has conducted research in Amsterdam, London and around the United States. She is majoring in English and corporate communications and public affairs, with minors in public policy and international affairs and history.

Why did you decide to study security of the commercial sex trade?

Tower Scholars PortraitsStudying the sex trade is certainly not something to take lightly. When I first became interested in it, I wanted to understand the power given to the women by the law — how were their rights and freedoms restricted? As I looked more into the subject, however, what caught my interest was not the legality or morality of the sex trade itself. Rather, it was the concerns of the individuals involved. They did not focus on the larger debates on freedom and empowerment surrounding the industry, because it simply did not matter to them. Prostitution was their means of survival. They focused on surviving and protecting themselves. It was that survival instinct I wanted to study, so as I moved forward with my research I began to examine sex workers’ concerns regarding security and protecting themselves.

Your research has taken you around the world. What did you learn from your experiences in Amsterdam and London?

My time in Amsterdam was short compared to the time I have focused on other locations. However, what I did find was that regardless of its legality, the role of law enforcement remains a large issue of concern. Those in the industry still worry about whether the police had the ability (or, more accurately, the will) to protect the workers if they were put into danger by a client for any reason.

When I studied in London, I was exposed to a different side of the sex industry. Through the non-profit I interned with,  I worked with women who had been trafficked into the sex industry. Some of the larger problems that the women seemed to face had to do with the government and police force, and the assistance the women received or did not receive. More than that, however, my time in London showed me the impact that sex trafficking can have on an individual. Regardless of country, race, ethnicity, or age, these women were all tremendously hurt by their experiences, and it was one of the ugliest sides of humanity I have seen. Hearing their stories was an experience I knew I needed to have over the course of this research. It’s easy to talk about the Red Light District, or women who choose to be in the industry, or any of the lighter ways of looking at it. But in order to understand the sex trade fully, you have to acknowledge the worst, most difficult parts of it, even if it makes you uncomfortable. That full understanding is the only way we can see where the true problems lie and how we can work best with the individuals in the industry.

Have you looked into the sex trade in Dallas? How does it compare to the rest of the world?

Dallas is an interesting city to look into, because it is one of the worst areas in the United States for trafficking. However, the Dallas Police Department and the individuals I’m working with recognize this, and they have a goal of countering that status. They have developed a police system that empowers the women in the industry, as well as the officers who work the cases. It has taken a while, but the system Dallas developed is making an impact. The difference between it and other systems is that a segment of government – the police force – is at the head of it. Because of that, they can work with non-profits and other government segments to unite them all in order to attack the problems they see.

What have you found most surprising about your research?

As a communications scholar, I notice quite a bit about how people talk about the subject, and what they say or don’t say. What has been most surprising to me is how all of the people involved in the industry identify the women. Most of them view the women as victims, but they do not focus on the male prostitutes as victims. The definition of victim changes from group to group, but the title remains the same. It is a small detail, but it defines so much in the industry. How the women are viewed or defined changes how they are treated, and I cannot help but wonder if that helps or hurts the efforts of the groups trying to offer assistance to the women.

How does your research for the Tower Scholars Program fit into your goals for the future?

People ask me all the time if this is a field I want to go into. Truthfully, I don’t know. If I am able to go into the field in a position I am passionate about, I certainly am not closed to it. But I always emphasize that my choice in doing this research is not about getting into an industry or building a resume. Small as it may be, this is something that could have an impact that lasts longer than I could. It’s something that can be used as is or built upon, depending on what the industry needs as time passes. That’s why I am passionate about this research – it gives me the chance to leave a small footprint behind, and if it can help even one woman, then I have succeeded in something.

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Former Tower Center Student awarded Marshall Scholarship

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Brandon Roselius with Rahfin Faruk at the Tower Center’s 2014 National Security Conference.

SMU graduate Rahfin Faruk was awarded the Marshall Scholarship, a scholarship awarded to young Americans to study in the United Kingdom, becoming SMU’s second Marshall Scholar.

While at SMU, Faruk ran the Tower Center Student Forum and was awarded the Tower Center’s Jack C. and Annette K. Vaughn Foreign Service and International Affairs Internship.

“I am incredibly humbled to receive this opportunity to study in the United Kingdom and thank the British people for this scholarship,” Faruk said in an SMU press release.

“My life’s goal is to create an economically and financially inclusive world, which I believe can beget socioeconomic progress in critical areas like education, health and housing. With the support of the Marshall Scholarship, I will explore how different technologies, models and approaches can transform painful paradoxes – like the poorer you are, the more you pay – for billions of people.”

Read more about Faruk here.

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Josh Rovner | Push for transparency could have cost Clinton the election

Tower Chair Joshua Rovner wrote an editorial for the Washington Post, “This is why the push for transparency may have cost Clinton the election,” Nov. 28.

Rovner argues that the push for openness from law enforcement and intelligence officials, while understandable, has unintended consequences. Eleven days before the election, James B. Comey, director of the FBI,  sent a letter to Congress saying he was looking over new information that could be relevant to the investigation of Hillary Clinton’s use of a private email server. Clinton herself has said that this cost her the election.

“Transparency is the only way we can hold executive agencies accountable,” Rovner wrote. “However, the Comey saga is a stark and troubling reminder that transparency has a price.”

Read the full editorial here.

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Tower Scholars donate laptops to refugees to help them learn English

Highland Capital Management Tower Scholars Kovan Barzani and Thomas Schmedding donated 11 laptops to refugees in Dallas to help them learn English as part of a group project for a class.

Barzani, Schmedding and four of their classmates submitted their project for Engaged Learning funding and used the money to buy the laptops and download a software program that will teach the refugees English.

“There’s so many barriers that exist for language development and getting those resources to people quickly, especially right when they get here, will help them so much as they go through,” Barzani said.

Listen to KERA’s story here.

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Board Member William Cohen | “Don’t Retreat into Fortress America”

Honorary Tower Center Board Member William Cohen, former Republican senator and secretary of defense, coauthored an opinion piece for the New York Times, “Don’t Retreat into Fortress America” with Gary Hart Nov. 22.

Cohen and Hart explore the two greatest surprises of 2016 — Brexit, and the election of Donald Trump as president. Both, they argue, will have a significant impact on post-war international order.

“Wise leaders such as Truman, Eisenhower, Marshall and Acheson constructed a temple in which freedom could thrive and economies could prosper,” Cohen and Hart wrote. “The interior of the temple may be in need of renovation, but Mr. Trump should not pull apart its central pillars and bring it crashing down.”

Read their column here.

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Student Blog | Hope fades for unification of the Korean peninsula

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Kuyoun Chung prepares for her talk at the Tower Center “Security of the Korean Peninsula” Nov. 11 as part of the Sun & Star Program.

Kuyoun Chung, research fellow in the Korea Institute for National Unification (KINU)’s International and Strategic Division, came to SMU to give the talk “Security of the Korean Peninsula” Nov. 11 as part of the Tower Center’s Sun and Star program.  She came fresh from a three-day strategic dialogue in D.C. with think tanks, state department officials, and U.S. military officials to speak to us.

At the beginning of every new South Korean administration, the leaders come together to create a unification policy.  Its current administration, under President Park Geun-hye, hopes to achieve unification by ending the current cycle of provocation and compensation and replacing it with enough trust to begin a new cycle of denuclearization and collaboration.  Until Korea resolves the fundamental incompatibility between its hopes of unification and the international strategy of deterrence, pressure, and sanctions, Chung says it will be difficult to establish such trust.  Given the steady increase in sanctions and North Korea’s dual strategy of nuclear and economic development, it is easy to understand the title of Chung’s first slides: “fading hopes for unification.”

Today, she believes there are two possible ends for the 60-year-old conflict.  One possibility is for North Korea and the U.S. to reach a peace treaty, which would require recognizing North Korea as a sovereign nation. American recognition would leave the Korean peninsula divided between two hostile nations. Alternatively, Dr. Chung believes the path to unification would proceed from North Korean regime change.

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SMU students A.J. Jeffries and Matthew Reitz interview Kuyoun Chung Nov. 11.

Chung also emphasized the different goals of the major stakeholders in East Asia.  The United States and Japan share a vision of a united Korea as a liberal democracy operating in a market economy, a nation that would be friendly to the U.S.-Japanese alliance.  China’s ideal form of unification emphasizes its concerns about a U.S.-Japan-Korea triple alliance.  It would prefer to see unification delayed until a self-determined nation could emerge without any need for an alliance with the United States.  Finally, Russia’s focus on the Crimea means it would prefer not to have Korea buck the status-quo.

In her concluding statements, Chung explained that progress towards unification would be a combination of urgency, initiative, and mobilization. She said that unification would be a gradual, generations-long process that would give time for the ideal circumstances to come about.  Over the course of those generations, South Korea would have to strengthen its unification-oriented policies by nudging North Korea towards regime change and mobilize and coordinate international support around a unification policy.

During the question and answer session, Chung also discussed the need to prepare the people of South Korea for unification.  Many members of the younger generation, who have trouble finding employment, oppose unification because they prefer to see South Korea’s economic resources used to improve their situation at home first.  However, there are programs prepared as part of a campaign to emphasize the valuable aspects of unification to the North Korean people.  The primary appeal would be the denuclearization of North Korea, eliminating a significant threat to South Korea.

When asked about the potential impact of President Donald Trump on Korea, she focused on his promises to remove troops from South Korea and Japan.  This, Chung explained, would significantly alter the balance of power in Asia, giving China the opportunity to expand its influence.  Greater China influence would push unification efforts closer to China’s vision.


Tower Scholars PortraitsA.J. Jeffries is from Downers Grove, Illinois, and he is triple majoring in history, economics, and public policy with a double minor in philosophy and public policy.  He is a Highland Capital Management Tower Scholar, and when healthy, he can be found in the center of the midfield for the SMU soccer team.  Off the field, he enjoys writing for the honors newspaper, Hilltopics, cooking, and reading.

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