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KORUS Withdrawal Threat Reportedly on Hold

Monday, September 11, 2017
Sandler, Travis & Rosenberg Trade Report

The White House has reportedly postponed consideration of a withdrawal from the U.S.-Korea free trade agreement after administration officials, business groups, and others raised concerns.

According to press reports, following bilateral discussions in late August that yielded little progress toward President Trump’s goal of renegotiating the KORUS agreement, Trump considered notifying Korea that the U.S. would withdraw. However, a range of interested parties reacted quickly with an intensive effort to prevent a withdrawal.

In a joint statement, the senior Republican and Democrat leaders of the Senate Finance and House Ways and Means committees acknowledged that South Korea needs to improve its implementation and compliance with the agreement but said the U.S. “must not withdraw” as it works to achieve that goal. KORUS is “a central element” of the U.S.-Korea alliance, the lawmakers said, and Korea is the seventh-largest export market for the U.S., making it “a vital customer” for U.S. manufacturers, service providers, farmers, and ranchers.

U.S. Chamber of Commerce President Thomas Donahue was even more forceful, calling withdrawal a “rash and irresponsible move” that the Chamber opposes “in the strongest possible terms.” Donahue asserted that withdrawing from KORUS would reduce U.S. exports and the associated domestic jobs, jeopardize national security by alienating South Korea at a time of rising tensions with North Korea, and complicate other initiatives such as tax reform by damaging relations between the Trump administration, the business and agriculture communities, and Congress.

While there were reports that a notification of withdrawal could have been submitted as early as Sept. 5, no such action had been taken as of Sept. 8 and multiple press reports indicate that the White House has delayed further consideration. However, a Reuters article quoted an unnamed administration officials as cautioning that the idea of withdrawal is “not dead” and “could come back.” Stratfor, a geopolitical intelligence company, added that a withdrawal from KORUS is a “far more realistic” possibility than Trump’s repeated threats to pull the U.S. out of NAFTA given that the former is “a five-year-old trade deal between two countries an ocean apart” while the latter is “a 25-year-old trade deal between three countries on a deeply integrated continent.”

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