US President Donald Trump and President Moon Jae-in
US President Donald Trump all but officially declared his plans to renegotiate the South Korea-US Free Trade Agreement (KORUS FTA) to rectify trade imbalances between the two sides.
“[T]he United States has trade deficits with many, many countries, and we cannot allow that to continue. And we’ll start with South Korea right now,” Trump said at his June 30 summit with South Korean President Moon Jae-in.
Trump also strongly hinted at renegotiation of the KORUS FTA in prefatory remarks before the summit.
“We are renegotiating a trade deal right now as we speak with South Korea, and hopefully it will be an equitable deal -- it will be a fair deal to both parties,” he said.
Trump went on to say the KORUS FTA has been “a rough deal for the United States, but I think that it will be much different.”
“We want something that’s going to be good for the American worker,” he added.
“It will be good for both parties.”
In a joint statement at the White House Rose Garden just after the summit, Trump said the US trade deficit with South Korea had “increased by more than $11 billion” since the FTA took effect in 2012.
“Not exactly a great deal,” he said.
Trump placed particular emphasis on his agreement with Moon to continue working together to resolve trade issues between the two sides, including the FTA.
“I've called on South Korea to stop enabling the export of dumped steel,” Trump said. Trump further hinted that the two sides had effectively agreed on a negotiation, saying they planned to work together to ensure a fair negotiation.
With FTA renegotiations apparently looming, South Korean trade authorities are in emergency mode. Previously, trade experts had predicted that if the Trump administration did attempt renegotiations, it would not start until the second half of next year. US trade authorities are currently poised to begin renegotiations on the North American Free Trade Agreement (NAFTA) around August, and with those talks predicted to end sometime in the second half of 2018, KORUS FTA renegotiations were seen as likely to come only afterwards.
But with Trump’s remarks about “starting now” with trade renegotiations, it is possible that the NAFTA and KORUS FTA renegotiations could end up taking place more or less simultaneously.
Since the Trump administration took office in January, South Korean trade authorities and trade associations have been engaged in active outreach efforts to appeal to the US and avoid renegotiation of the KORUS FTA. This has included ongoing attempts to explain to major Washington think tanks and business groups and to Congress - which has the power to check the Trump administration - that the FTA is a mutually beneficial arrangement. Efforts have also been made to pacify Washington by managing the trade balance - in particular, by keeping South Korea’s trade surplus, which has been the focus of repeated remarks by Trump, to a minimum.
Indeed, South Korea’s trade surplus with the US has fallen markedly this year. The cumulative trade surplus with the US from January to May totaled US$6.92 billion, down US$4.01 billion from the same period in 2016. It has already far outpaced the US$2.56 billion won annual decline in the trade surplus with the US for last year. Monthly imports of US products have increased for all seven months since Trump was elected President in November.
But all of the efforts made by South Korea ended up failing to sway Trump. If anything, Trump went on the offensive with unexpected haste - leaving South Korean trade authorities facing a perilous renegotiation in which they would have to achieve a “new balance of interests” while defending the interests of South Korean exporters as much as possible.
In a joint statement released after the summit, the two sides agreed to committed to foster expanded and balanced trade while creating reciprocal benefits and fair treatment between the two countries. In that regard, the two sides further committed to foster a truly fair and level playing field, including working together to reduce the global overcapacity of such basic materials as steel, as well as non-tariff barriers to trade.
Both sides pledged to work together, as part of the process of the Commercial Dialogue, to promote investment, support entrepreneurs, and facilitate cooperation between the United States and the ROK to boost economic growth and job creation in both countries.”
By Cho Kye-wan, staff reporter
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