Pressure from TrumpThe Korea-U.S. Free Trade Agreement will likely be revised after the U.S. administration requested that a Joint Committee meeting be held to deal with issues related to the trade deal, which took effect five years ago. Even before he was elected president, Donald Trump has been negative about the bilateral pact. After his inauguration, he withdrew from the Trans-Pacific Partnership and has been preparing for a revision of the deal with Korea. Trump even used such emotional rhetoric as “terrible” or “the worst” to refer to the deal. At a summit in Washington with President Moon Jae-in last month, Trump told the media that both sides were already reviewing the deal, which was not true at the time.
Fortunately, the United States proposed “amendments” — not a renegotiation — of the trade pact in a letter sent to the Korean government Wednesday. That suggests the Trump administration was not able to find enough reasons to shake the basic frame of the deal. If Uncle Sam denies its most recent bilateral trade pact, it could lose the very trust it earned from its trading with other countries around the world.
The U.S. will focus on easing its deepening trade deficit, particularly by targeting imports from the automobile and steel sectors. Washington is expected to underscore the rapid increase of its trade deficit from $13.2 billion in 2012 to $27.6 billion last year. As it did with Japan in the 1980s, the U.S. also could demand that Korea regulate its exports to the U.S. while expanding its imports from the U.S. Washington will also try to soften the Korean government’s regulation on internet trading given the sensitivity over the location of internet servers for Google as seen in the EU market.
Korea must deal with U.S. complaints objectively and calmly. For cars, for instance, our imports from the United States rose sharply while our exports actually declined over the past five years.
Overall, trade between Korea and the U.S. increased 1.7 percent at a time that global trade decreased. Here’s another pertinent fact. While Korea’s trade surplus with the U.S. doubled, the U.S. services surplus rose to $14.1 billion from $10.9 billion in the same period. Korea’s investment in the U.S. also grew more than 60 percent and helped create jobs in America.
Korea is a country that pays a big share of the costs of stationing U.S. forces here and purchases a huge amount of weapons from the United States. Seoul can also call for some improvement in the pact in such growing fields as intellectual property, travel and investor-state dispute settlements. Korea needs to highlight the reciprocity of the FTA.
What worries us is that we don’t have a trade representative. Sixty days after the launch of the new government, the post is still empty due to a delay in passing a bill to reorganize the government. We hope opposition parties cooperate with the ruling party to pass the bill as soon as possible.
JoongAng Ilbo, July 14, Page 30