Kim opposes FTA termination
Finance Minister Kim Dong-yeon on Friday expressed his opposition to the potential termination of the free trade agreement between Korea and the United States, saying that the two countries should find some common ground.
Regarding the renegotiation of the trade deal, which could kick off by the end of this year at the earliest, the minister said, “We can’t entirely exclude the extreme possibility of abolition [of the FTA], given any theoretical scenario is possible. But that is not desirable.”
He went on to say that the two countries should seek common ground through negotiation.
Even though Korea is seeing a trade surplus with the United States, the size of the surplus dropped this year and Korea posted a deficit in service and capital accounts, which Kim said Korea could use toward the goal of realizing a profit balance between the two parties at the negotiation table. The minister also declared that his ministry would take up the role of mediator between different government institutions engaged in the negotiation.
He was speaking at a press conference for Korean reporters and correspondents while attending the World Bank and International Monetary Fund annual meeting, as well as the meeting of the Group of 20 finance ministers and central bank chiefs, in Washington, D.C.
The minister anticipates a slim chance of the U.S. Treasury Department designating Korea as a currency manipulator in a report to be released imminently.
“Korea does not manipulate currency,” Kim said, “nor does it meet all of the criteria for the designation.”
In a semiannual report in April, the U.S. government listed Korea, China, Japan, Germany, Switzerland and Taiwan as six countries that it is monitoring for currency manipulation - the same countries it listed in October last year. None of the six countries have yet to be branded as “currency manipulators.”
Of the three criteria laid out by the Treasury to determine if a country is participating in unfair currency practices, Korea matched two in the latest report. One is the Korean economy having a significant bilateral trade surplus with the United States, and the other is engaging in persistent and one-sided intervention in the currency market.
If the Treasury labels a country as a currency manipulator, the country has a year to try and solve the problem through a series of negotiations, and if it does not work out, the United States could take a number of steps in retaliation, including a U.S. state-run development agency suspending the financing of any operations in the country.
The minister also shared with reporters the conversations he had with three international credit ratings agencies - Moody’s, Standard & Poor’s and Fitch. The initial inquiry he received over the three rounds of meetings was about concerns over the geopolitical situation stemming from North Korean nuclear threats.
“Credit ratings agencies seem to consider the latest chain of provocations from North Korea as quite different from the patterns in the past,” Kim said, but the risk factor is dealing a limited blow to the market thanks to the Korea’s healthy financial fundamentals, international cooperation and the stability it could sustain in the future.
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