U.S. brings up trade imbalance in defense talks

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U.S. brings up trade imbalance in defense talks

Amid tough ongoing negotiations to renew the bilateral defense cost-sharing deal, Seoul stressed the amount of U.S. weapons it has purchased, to which Washington responding by pointing to its Korean car imports, according to multiple diplomatic and security sources Thursday.

According to the sources, Seoul, through high-level channels, conveyed that Korea imported some $6.279 billion worth of U.S. weapons over the past decade, according to data by the Stockholm International Peace Research Institute (Sipri), and in the future plans to increase the amount it spends on such arms purchases. However, Washington’s team showed no intentions to back down and countered by pointing out that the United States imports a high number of Korean vehicles each year and is facing a “great trade imbalance.”

Korea imported some $612 million in U.S. arms last year, according to Sipri data. During the same time period, the United States imported some $13.635 billion in Korean vehicles, excluding auto parts, according to the Korea International Trade Association. Last year, the United States racked an $11.81 billion trade deficit with Korea in vehicles. The two countries kicked off talks for their next Special Measures Agreement (SMA) last month as the current one-year deal is set to expire on Dec. 31. Under the 10th SMA, Seoul agreed to pay nearly 1.04 trillion won this year, which amounted to some $920 million at the time of its signing in March. This was 8.2 percent more than what Seoul spent the previous year for the stationing of 28,500 U.S. troops in South Korea.

Such issues are said to have also been raised as the two sides held the first rounds of talks on the 11th SMA in Seoul on Sept. 24 and 25.

Another round of talks is expected to resume as early as next week, the first since Jeong Eun-bo, a former vice chairman of the Financial Services Commission, took over as Seoul’s new chief SMA negotiator replacing diplomat Chang Won-sam, who led the 10th round of negotiations. Unlike previous SMA negotiators who have been selected from the Foreign or Defense Ministries, Jeong is the first who is a career Finance Ministry official. The U.S. chief negotiator is James DeHart, a former charge d’affaires at the U.S. Embassy in Norway.

Washington has been pressuring Seoul to pay a higher share for defense and could demand as much as $5 billion. Korea in turn has been bringing up its American weapons purchases as one of its negotiating leverages in the defense cost-sharing talks.

Korean President Moon Jae-in during his summit with U.S. President Donald Trump in New York on Sept. 23 also similarly stressed Seoul’s arms imports from Washington over the past decade and plans to purchase more American weapons in the next three years, according to a Blue House official after the meeting. Cha Doo-hyeon, a researcher with the Asan Institute for Policy Studies in Seoul, warned of the dangers of leveraging U.S. arms purchases as a bargaining chip, and said, “It is a strategy to correspond to President Trump’s way of thinking, viewing alliances as business relations, but the more we respond in that manner, the more it provides the U.S. side a pretext to come on stronger.” He added that at least in the early stages of negotiations, it is important to emphasize the original spirit of the defense cost-sharing, sustaining the operating cost of the U.S. Forces Korea.

BY LEE YU-JUNG, SARAH KIM [kim.sarah@joongang.co.kr]
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