Trump wants to end ‘horrible’ South Korea-US trade deal
SEOUL, South Korea: South Korea’s trade community is on the defensive after President Donald Trump’s renewed call to terminate a free-trade agreement with the country, which many experts here see as a puzzling move during an inopportune time of heightened tensions over North Korea’s nuclear and missile programme.
Earlier this month, Trump instructed advisers to prepare to withdraw from the agreement, also known as Korus. He seemed to be making good on a threat he had floated since April, when he claimed that the deal, now in its fifth year, was “horrible” and left America “destroyed.”
The man who negotiated the free trade agreement, or FTA, for South Korea vigorously disputes that, and argues that the timing couldn’t be worse.
“South Korea has been an adamant ally to the United States for the last 70 years. Now, North Korea is provoking and China is expanding their power, flexing muscles,” said Choi Seok-young, who is now ambassador to the United Nations. “We don’t quite understand what is the main purpose of Mr Trump attacking Korea by terminating Korea-US FTA at this critical time.”
His American counterpart, Wendy Cutler, warns that an American pullout from the agreement would likely drive South Korea into a closer economic relationship with China.
The White House has not made a formal announcement on terminating the deal. In fact, days after reports surfaced of Trump’s move to withdraw, the United States Trade Representative Robert Lighthizer contradicted Trump, telling reporters that the administration wants to negotiate the deal and make “some amendments” instead.
The uncertainty may be why, at least in part, that the administration of South Korean President Moon Jae-in has not yet publicly responded to Trump’s latest threat.
Since Trump’s election, officials here have stressed that the agreement, while not perfect, is designed to be mutually beneficial.
Trump’s consistent criticism of the deal has left South Korean trade officials and experts rejecting his characterisation of it as a US job killer, and instead highlighting gains that US has made in the Korean market, sometimes to the detriment of Korean workers.
“The US argument to renegotiate the Korus FTA is very difficult to understand from the Korean perspective,”
We don’t quite understand what is the main purpose of Mr Trump attacking Korea by terminating Korea-US FTA at this critical time. Choi Seok-young, who is now ambassador to the United Nations
said Choi. He called “revolutionary” move.
“That makes me wonder: How can we trust the United States? They pushed it very strongly 10 years ago,” he said, “and after a while, they come back to abolish it. It’s a matter of trust, and this kind of attitude does not help in strengthening allies.”
The agreement was negotiated and signed under George W. Bush. It was ratified by Congress in 2011 and took effect in 2012.
It wasn’t universally acclaimed in South Korea. Both in 2008 it a when the agreement was signed, and in 2011 when Congress ratified it, there was strong opposition here to the deal. There were daily demonstrations by Korean workers, particularly farmers who opposed increased US beef imports.
In 2011, an opposition leader set off tear gas on the parliament floor in protest.
Since 2012, Korus has produced mixed results for the United States.
The US merchandise trade deficit with South Korea more than doubled, which is the basis of Trump’s rejection of the deal, even though economists generally agree that trade imbalances are a result of broader macro- economic factors and not simply because of bilateral trade of goods and services.
Overall, Korea accounts for only 2.5 per cent of the 2017 US trade deficit in goods and services.
The trade growth on both sides has been slower than initially anticipated. — WP-Bloomberg