Future of trade pact still unclearIt remains unclear whether the Korean government will be forced to renegotiate the bilateral free trade agreement with the United States, as the issue remained unsolved following last week’s presidential summit.
The South Korean government has repeatedly denied that there has been any agreement reached between Korean President Moon Jae-in and U.S. President Donald J. Trump on the issue during President Moon’s first visit to the White House last week.
But the Korean business community is starting to wonder if the renegotiation is inevitable under rising pressure from Trump and raising the need to prepare to minimize the damages that may be inflicted on Korean businesses if changes are to be made.
On Friday Jang Ha-sung, Blue House policy chief, told reporters that the U.S. President has raised the trade imbalance particularly on automobile and steel as well as the large trade deficit and mentioned the need for a new deal or some actions to solve the problem.
“On this issue President Moon has emphasized the benefits for both countries from the FTA and proposed a joint investigation on the [positive] effects since the FTA has been launched,” Jang said.
But the Blue House chief of staff said the only agreement that the two sides have made in regards to trade was in the joint statement that was released after the meeting of the two heads of states.
The joint statement that came seven hours after the meeting did not mention the renegotiation of the bilateral trade agreement. In fact it only said, “President Trump and President Moon 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 global overcapacity of such basic materials as steel, as well as non-tariff barriers to trade.”
The U.S. government, on the other hand, seems to be continuing to push for a renegotiation.
On the same day the Blue House policy chief brushed off reports on a renegotiation of the bilateral agreement Deputy White House Secretary Sarah Huckabee Sanders said the opposite.
“At the direction of the President, [U.S. Trade Representative] Ambassador [Robert] Lighthizer is calling a special joint committee meeting to start the process of renegotiating and amending the deal,” Sanders said. “And as always, and as we’ve said many times before, the President is committed to making sure he gets the best deal and a better deal if possible when it comes to trade.”
The Korean government and the Korean trade advocacy group have been countering the argument by Trump that the U.S. has suffered a trade deficit since the FTA was launched.
Although Korea’s surplus with the U.S. has doubled in the last five years from $11.6 billion in 2011 before the FTA was officially kicked off to $23.2 billion last year, the Korean government argues that the biggest contributor of U.S. trade deficit is China and not Korea.
China accounts for 47 percent of the overall U.S. trade deficits while Korea’s contribution only makes up 3.8 percent.
But pressures are expected to continue to mount considering that the U.S. Commerce Department will be releasing its reports on the 16 trading partners that include China, Korea, Japan and Germany. The report, which is the first of its kind, was ordered by President Trump on March 31 and has a deadline of 90 days.
BY LEE HO-JEONG [email@example.com]