Gov’t preps for all possibilities in FTA talksThe Korean government remained unfazed despite reports U.S. President Donald Trump is considering terminating the Korea-U.S. free trade agreement.
The Korea Ministry of Trade, Industry and Energy on Sunday said it is preparing for all possibilities and monitoring the situation closely.
The ministry said the government will maintain its earlier position of engaging the FTA situation with confidence and the national interest in mind.
Trump, who was visiting Houston on Saturday following the devastation caused by Hurricane Harvey, answered “I am” when asked if he was discussing with his advisors on the termination of the bilateral free trade pact with Korea as reported by the Washington Post earlier.
“It’s very much on my mind,” the U.S. president said.
While the Washington Post reported that no final decisions were made, Trump has ordered his advisors to prepare a withdrawal plan for the FTA that was introduced under the Barack Obama administration in 2012.
The fate of the bilateral trade deal is expected to be determined later this week, as early as Tuesday.
Reportedly National Security Advisor H.R. McMaster, Defense Secretary Jim Mattis and National Economic Council Director Gary Cohn oppose scrapping the agreement.
The Washington Post report came as a surprise, especially considering that the bilateral trade agreement was not mentioned during a 40-minute phone conversation between Korean President Moon Jae-in and Trump made the day before.
Both sides only started talks on the possibility of a renegotiation of the deal 10 days ago when a special session took place in Seoul.
Trade Minister Kim Hyun-chong on Aug. 22, after holding a special session with the United States Trade Representative Robert Lighthizer, said both sides have failed to reach an agreement and that the Korean team did not agree to the U.S. proposals.
Since the Washington Post’s report there have been growing concerns from the U.S. trade community.
According to a report by Reuters, the U.S. Chamber of Commerce memo asked its senior executives to push for an “all hands on deck effort” to convince the White House not to terminate the deal.
The American business lobby group stressed that pulling out of the pact will only rupture relations between the White House and U.S. businesses, particularly the agricultural community, citing that exports in aerospace have doubled to $8 billion thanks to the free trade pact while agricultural goods exports to Korea soared thanks to the phasing out of the double-digit tariff.
The National Association of Manufacturers also sent out an e-mail to its members to weigh in on the issue with “senior administration officials” as well as members of congress and governors, citing that a notice of intent to withdraw from the trade deal has been drafted.
Trump has recently been pushing for the termination of a number of the country’s current trade deals.
A week ago he tweeted that Canada and Mexico have been “very difficult” on the renegotiation of [North American Free Trade Agreement], which he claimed is the “worst trade deal ever made.”
He ended the tweet by asking, “may have to terminate?”
The same issue was addressed during a rally Trump held in Arizona where he said, “I don’t think we can make a deal [on NAFTA] because we have been so badly taken advantage of.”
He added that particularly because of Mexico he might have to end up terminating the deal.
It seems the U.S. president has selected Seoul as his next target, despite the Korean government’s efforts to curb what the United States considers a trade imbalance.
Since Trump took office on a platform of trade protectionism driven by “America first” policies, Korea’s trade surplus has seen a significant drop in the first half of this year.
While other major trading partners of the United States, including China and Japan, have seen an increase, Korea’s trade surplus has shrunk 32 percent from $16.6 billion to $11.2 billion in the first six months of this year.
This was largely the result of Korean goods exports to the United States shrinking while imports of U.S. goods increased during the same period.
Korea’s U.S. exports have dipped from $36.5 billion last year to $35.7 billion as of the end of June. But during the same period imports have increased 22 percent from $20 billion last year to $24.4 billion this year.
This is the first time in seven years that Korea’s trade surplus has shrunk compared to the pervious year.
On the contrary, China’s surplus has risen 6.1 percent during the same period while that of Japan has slightly increased at 0.9 percent. Mexico’s surged 13.3 percent.
However, it is thought that Trump’s rhetoric about withdrawing from the trade deal may be a negotiation tactic, as he cannot actually revoke the agreement without the approval of the U.S. Senate.
Trump was said to have been angered by the trade representatives’ meeting last month, which is believed to be the reason why he demanded his advisors consider a withdrawal.
BY LEE HO-JEONG [firstname.lastname@example.org]