Seoul says it has strategy for FTAThe Minister of Trade, Industry and Energy said that Seoul still has “several cards” up its sleeve in the ongoing negotiations over the possible termination of the bilateral trade agreement between South Korea and the United States.
“In a negotiation [like the FTA] each side has [its own] strategies,” Paik Un-gyu, minister of trade, industry and energy, said on Tuesday during a meeting with trade industry officials at the Korea International Trade Association headquarters in Seoul. “We can’t show all of the cards at this point as the negotiation is ongoing, but we have several cards [prepared].”
But when asked if the U.S. has been pressuring the South Korean government to further open up the agriculture market, he did not answer.
On Saturday the Washington Post reported that U.S. President Donald J. Trump has been discussing the termination of the bilateral free trade pact with his advisers. The trade pact went into effect five years ago under his predecessor Barack Obama.
When asked by reporters during a visit to Houston, Trump replied, “It’s very much on my mind.”
The move comes at a time when geopolitical tensions are rising as North Korea conducted its’ sixth nuclear test, which is estimated to be the most powerful yet, on Sunday, increasing uncertainty in the South Korean economy.
The stock market has fallen for the second consecutive day since the test, although the impact was considerably less than on Monday.
Although the White House has not yet announced its decision, the continuing rhetoric from Trump has raised concerns that Korea’s economic relations with the U.S. will be weakened at a time when protectionism has been rising in the global market.
Paik said the government will be working on expanding its trading partners, as well as diversifying its export markets in order to weather the situation.
“We plan to create a new trade road map while forming new partners such as Asean, India, Eurasia and South America,” Paik said.
He added that the government will enhance the value of exported goods through a converged platform that connects manufacturing with ICT as well as services. Additionally, the government will be focusing on supporting the development of high-tech products like autonomous vehicles and drones through various means, including tax cuts.
Meanwhile the Korea Institute for International Economic Policy on Monday released a study that estimated that the U.S. has lots more to lose if it pulls out of the trade pact.
The research institute said that if the bilateral trade agreement didn’t exist, Korea’s surplus in trading with the U.S. would have been $260 million more because imports would see a sharper drop than exports.
Last year Korean manufactured goods exported to the U.S. amounted to $65.6 billion while Korea imported $36.4 billion worth of goods from the United States. As a result, the balance on trading with the United States recorded a $29.1 billion surplus. However, assuming the FTA didn’t exist, exports to the U.S. would shrink 2 percent while imports would drop 4.3 percent, resulting in a $29.4 billion surplus.
BY LEE HO-JEONG [firstname.lastname@example.org]