South Korea and US to discuss renegotiation of the KORUS FTA this week

Posted on : 2017-08-20 11:10 KST Modified on : 2017-08-20 11:10 KST
Disagreements center on steel, automotive trade imbalance
KORUS FTA
KORUS FTA

The South Korean and US governments have agreed to hold a special session of the US-Korea FTA Joint Committee on August 22 in Seoul to discuss the possibility of renegotiating the trade agreement. It is expected that there will be a considerable tug-of-war between the US government, which has consistently demanded revisions to the FTA, and the South Korean government, who has maintained that both governments should first examine the effects of the FTA.

On August 18, South Korea’s Ministry of Trade, Industry and Energy (MOTIE) announced that it had reached an agreement with the Office of the United States Trade Representative (USTR) to hold the meeting of the Joint Committee in Seoul on August 22, and revealed that, “The meeting will begin with a video conference between South Korea’s Trade Minister Kim Hyun-chong and United States Trade Representative Robert Lighthizer, followed by senior-level talks on location in Seoul.”

Lighthizer, who is also involved in negotiating amendments to the North American Free Trade Agreement (NAFTA), will participate in the Joint Committee special session meeting through video conferencing from Washington D.C., due to scheduling conflicts. According to the Ministry of Trade, Industry and Energy, “USTR Chief of Staff Jamieson Greer and Assistant US Trade Representative Michael Beeman will be flying to Seoul to attend the senior-level meetings as part of the US delegation.”

The South Korean and US trade authorities struggled for some before reaching an agreement on the location for the special session. Although it is stipulated that the nation receiving the request for revisions hosts the first Joint Committee, in a request to MOTIE sent on July 2, the US proposed a meeting within 30 days in Washington, D.C. The Ministry effectively rejected this proposal with a counterproposal, for a Joint Committee to be hosted in Seoul on a suitable date, following the reorganization of the South Korean government trade system.

Although the matters to be discussed by the Joint Committee have not yet been decided, it is expected that the meeting will cover various issues including the amendment of the FTA. In particular, given that the US has consistently indicated its dissatisfaction with the trade deficit in the automobile and steel category, it is expected that the US delegation will demand immediate amendments to the trade agreement from the outset.

President Donald Trump, even when discussing the North Korean missile situation with South Korean President Moon Jae-in on the phone on Aug. 7, put emphasis on the trade issue, saying, “There’s a need to revise the South Korea-US trade agreement, to correct the huge trade deficit and the development of an equal partnership.”

The South Korean government, on the other hand, is expected to advance the argument that it is possible to reach an agreement without revising the FTA directly. On the Joint Committee meeting, the Ministry of Trade, Industry and Energy said, “We plan to emphasize the fact that both nations have enjoyed mutual benefits through reciprocal trade, investment and employment, and discuss the best way to objectively examine, study and evaluate the effects of the trade agreement together.”

President Moon Jae-in, in a press conference on August 17 to mark his first 100 days in office, also said, “We will be able to negotiate an agreement that protects the national interest, by demonstrating that although we profit in the trade of goods, we have a deficit when it comes to services, and we have spent far more on investment.” Such a remark suggests that the South Korean government will focus on the effects of the FTA.

The government’s goal for this round of negotiations is expanding profit balances. According to a MOTIE source, “Our aim is to balance profits and maximize the national interest. We will be finalizing our strategy with our representatives this weekend.” In other words, the aim will not be to minimize the scale of trade in automobiles, steel and other categories to resolve the trade deficit, but rather expand the scope of trade for an “expanded, new balance of profits.”

According to trade law specialist Song Gi-ho, “Instead of an abstract goal like ‘the maximization of national interest,’ it is important to make clear what concrete goals the government has for the negotiation. The government needs to indicate, for example, whether its goals for the negotiation fit with its new economic policy of income-led growth, and only then will it be possible to evaluate the results later on.”

By Kim Sung-hwan and Cho Gye-hwan, staff reporters

Please direct questions or comments to [english@hani.co.kr]

button that move to original korean article (클릭시 원문으로 이동하는 버튼)