No Agreement Yet on Possible Renegotiation of U.S.-Korea FTA
The U.S. and South Korea came away from a meeting last week with no decision on whether to proceed with a renegotiation of their free trade agreement. U.S. Trade Representative Robert Lighthizer said the U.S. is looking to make “substantial improvements” to the KORUS agreement but Korean Trade Minister Kim Hyun-chong said Seoul “did not agree” to the “unilateral” U.S. proposal to renegotiate. No further talks have been scheduled but a USTR press release said discussions on issues raised during the meeting will continue over the coming weeks.
The U.S. requested the special session to discuss implementation concerns as well as potential modifications and amendments to the FTA. Lighthizer said the U.S. is interested in remedying “burdensome regulations that often exclude U.S. firms or artificially set prices for American intellectual property” but is looking to resolve other concerns as well.
One such concern is the U.S. trade deficit with Korea, which according to USTR more than doubled from 2011 to 2016 as goods exports declined 2.7 percent and services exports saw virtually no growth. USTR noted that the trade deficit in the auto sector alone was $24.4 billion, which was nearly 90 percent of the total U.S. goods trade deficit with Korea in 2016.
However, Seoul continues to assert that the FTA is not to blame for the deficit. Officials pointed out that the U.S. goods trade deficit with Korea was down markedly in the first half of 2017 and that the U.S. runs a surplus with Korea in services trade. Minister Kim said the two sides should “figure out” the real reason for the deficit through a joint study of the effects of the FTA before deciding on any additional steps. Korea is now awaiting a U.S. response to this proposal.
President Trump has threatened to withdraw the U.S. from its “horrible” FTA with Korea if he cannot secure sufficient changes. However, Minister Kim said this prospect was not discussed at the recent meeting.