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South Korean Trade Minister Kim Hyun-chong (second from right) attends the special second session of the KORUS FTA Joint Committee with US Trade Representative Robert Lighthizer (second from left) in Washington

Now that South Korea and the US have effectively agreed to initiate negotiations to revise the Korea-US Free Trade Agreement (KORUS FTA), this is likely to lead to a major overhaul of the agreement, experts say. The two countries are now entering a peculiar round of negotiations, since South Korea has granted the US side its unprecedented and unreasonable demand to resolve the trade deficit five and a half years after the FTA took effect, balancing the two countries’ interests.

During a meeting with reporters immediately after the conclusion of the second special session of the KORUS FTA Joint Committee, which was held at the Office of the United States Trade Representative (USTR) in Washington on Oct. 4, South Korean Trade Minister Kim Hyun-chong said, “Our two countries have agreed on the need to revise the agreement to further strengthen the reciprocity of the KORUS FTA.”

South Korea’s trade authorities announced that they would diligently move forward with the steps required to commence negotiations to revise the agreement in line with the Trade Procedure Act, which include assessing the economic feasibility of revising the agreement, holding public hearings and submitting a report to the National Assembly. Given the time required for these steps, the actual negotiations are likely to commence early next year.

There had already been premonitions that the two sides would move into negotiations to revise the KORUS FTA. These started when Kim, after learning that Trump had nearly written a letter announcing the US’s withdrawal from the KORUS FTA, made a hurried trip to the US to meet with US Trade Representative Robert Lighthizer on Sept. 20, which resulted in South Korea being the country to suggest holding a second special session of the joint committee in Washington, D.C.

“[Trump’s] threat of withdrawing from the agreement is real and imminent. I don’t think that he’s bluffing,” Kim told South Korean correspondents in Washington at the time. Facing Trump’s “madman strategy” of manipulating South Korea by talking about scrapping the agreement and the critical security threat posed by North Korea’s nuclear weapons and missiles, South Korea’s trade authorities basically seem to have backed down.

During the first special session of the joint committee, which was held in Seoul on Aug. 22, South Korea asked for the two countries to jointly investigate, analyze and assess the effects of the agreement before discussing any revisions, but this request was turned down by the US. South Korea’s Trade Minister’s Office said that “during the second special session, our delegation communicated to the Americans that our analysis of the agreement’s effects over the past five years shows that American products have benefited more from abolishing tariffs.” While the South Korean delegation submitted the analytical report it had prepared to the Americans, it basically shelved its proposal for a joint investigation and analysis.

“During the second special session, the US proposed some revisions to the agreement, and we also brought up corresponding items of interest,” South Korea’s Trade Minister’s Office said. The US reportedly provided a fairly specific list of items that it wants to revise in several categories, including industrial goods, services, intellectual property, investment and farm produce. This has prompted some to conclude that not only the necessity and purpose of revising the agreement, but also a significant portion of the specific agenda that will be dealt with in subsequent negotiations, have already come to light. It is conceivable, they say, that this could lead not only to adjustments and revisions of certain categories and items but also to a wholesale revision of the agreement covering a wide range of areas.

“The US will attempt to go beyond merely revising parts of the KORUS FTA and will seek a complete overhaul of the agreement that will basically be equivalent to scrapping it altogether,” said Song Gi-ho, an attorney specializing in trade and the chair of the trade committee for MINBYUN-Lawyers for a Democratic Society, on Oct. 8.

Song predicted that the US will pressure South Korea for changes in a wide range of areas, including pharmaceuticals, intellectual property, agriculture and the service sector, while also asking for unreasonable adjustments to South Korea’s action on automobiles and steel. “The US will attempt to revise the agreement according to the Trumpian model of free trade agreements by adding a clause banning currency rate intervention to support exports,” he added.

Once the commencement of the negotiations become official, there’s likely to be conflict inside South Korea’s industry and business sectors about paying the cost of maintaining the agreement. South Korea could find itself forced to make considerable concessions to the US in order to save the agreement.

“Some newspapers are reporting that we have ‘raised the white flag’ under pressure from President Trump’s talk of withdrawing from the KORUS FTA, but that’s completely false. South Korea and the US have only agreed to take steps to revise the FTA,” said Blue House spokesperson Park Soo-hyun during the briefing on Oct. 8.

“I want to clearly state that at the current stage negotiations to revise the agreement have not begun, and that if those negotiations do begin at a later point, we intend to determine the issues we want to revise by collecting opinions from a wide range of domestic stakeholders and related government ministries,” Park added.

By Cho Kye-wan, staff reporter

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