On Wednesday, the United States notified South Korea of their plans to start negotiating amendments to KORUS, the five year old free trade agreement with Seoul, as early as next month.
The Trump administrations latest move in American trade policy comes some months after President Trump stated his intention to either renegotiate or terminate, what he has described as, a horrible trade deal. In April, President Trump placed blame on Hillary Clinton, who promoted the final version of the agreement, as Secretary of State, before being approved by Congress.
In a letter to South Korean Trade Minister Joo Hyung-hwan, US Trade Rep. Robert Lighthizer said that the United States wants to discuss “possible amendments and modifications” to the pact that that went into effect under the Obama administration. The terms of the trade deal call for the talks to begin within 30 days. South Koreas Trade Ministry released a statement stating they will send an official to the US soon to discuss the date and agenda of a meeting.
“This is quite different from what the previous Administration sold to the American people when it urged approval of this Agreement. We can and must do better,” Lighthizer said in a statement.
South Koreas ministry also suggested that an initial step should be joint research into the US claims about the negative impacts the pact has had on trade; determining whether the US trade deficit with South Korea is caused by the trade deal or the result of other economic issues. South Korea also reminded the US that South Korea has no obligation to respond to a US request to amend the trade pact, since under the deals terms both sides need to agree in order for talks to be held on altering it
“We will meet and discuss mutual interests and concerns. Our stance is that we have not agreed on renegotiation of the deal,” Yeo Han-koo of South Korea’s trade ministry said.
South Korea, the worlds 11th biggest economy, was the United States’ 7th largest goods export market in 2016. The United States exports of goods to South Korea has fallen since 2011, with the US trade deficit in goods widening from $13.2 billion to $27.6 billion during the same period. The Trump administration has blamed the rising trade gap on South Korean market barriers, especially in the auto market. Some analysts however point to Koreas recently sluggish economy; noting that other countries have seen an even greater decrease in their exports to South Korea.
The trade deal has not been revised since going into effect in 2012. The Trump administrations push to revise the deal comes as a softer approach compared to other trade deals which have either been scrapped, the Trans-Pacific-Partnership (TPP), or plan to be fully renegotiated, the North American Free Trade Agreement (NAFTA).
The talks look to test South Koreas new president Moon Jae-in. President Moon is still waiting to get his trade minister approved, energy engineering professor Paik Un-gyu, who will be Robert Lighthizer counterpart.
The Moons government restructure plan hasnt been approved by the parliament and we dont have Lighthizers counterpart yet, so we want the U.S. to consider this and hold the meeting when we have the new trade minister, Yeo Han-koo, director-general for trade policy at the trade ministry, said by said.
In an effort to avoid a major renegotiation of its trade deal, South Korea announced their plans to import more energy products from the United States, and will also encourage Korean companies to invest more in US.
The United States is South Koreas second largest trading partner after China.
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