U.S., S. Korea begin trade talks amid tensions
Renegotiation of free-trade deal may strain relationship.
WASHINGTON — The Trump administration and South Korean officials met in Washington on Friday to begin formally renegotiating a freetrade pact that has served as a source of conflict between the two allies. The meeting came at a moment of heightened tension on the Korean Peninsula and unease in the broader region.
The countries focused on their main areas of interest, with the United States emphasizing trade in automobiles and what it considers various barriers to exports, U.S. negotiators said. “We have much work to do to reach an agreement that serves the economic interests of the American people,” Robert E. Lighthizer, the U.S. trade representative, said in a statement after the meeting.
President Donald Trump has called the six-year-old agreement a “horrible deal” for the United States and has pledged to rework it. Over a series of meetings in the coming months, U.S. negotiators hope to further open Korean markets to U.S. cars and to smooth irritants in the trading relationship.
But clashes over trading terms could risk dividing the long-standing allies at a critical time, as North Korea seeks to drive a wedge between South Korea and the United States, analysts say. North Korea restored a cross-border telephone hotline with its southern neighbor Wednesday, just one day after Trump said he had a “much bigger” nuclear button than the one North Korean leader, Kim Jong Un, had boasted of having on his desk.
“The reality is, it’s a fraught moment between the U.S. and South Korea in terms of their alliance,” said Sue Mi Terry, a senior fellow at the Center for Strategic and International Studies. Renegotiating the deal at this juncture “is going to widen the gap between Seoul and Washington,” she said.
The Trump administration’s approach to trade has also caused consternation in the wider Pacific region at a time of geopolitical unease.
The White House is emphasizing trade deals with specific countries rather than broader economic alliances. The approach counters efforts by the Obama administration, which sought to tie countries on both sides of the Pacific Ocean together under the Trans-Pacific Partnership. It also comes as China moves to piece together a sphere of influence through regional trade agreements and infrastructure projects.
Since withdrawing its support for the TPP, the Trump administration has sought trade concessions from Japan. But Japan has focused on a version of the TPP that does not include the United States and has expressed an unwillingness to settle for a narrower trade deal.
With South Korea, the White House’s overarching goal for renegotiating the trade pact is to reduce the U.S. trade deficit, which was $17 billion in 2016. But analysts view such a goal with skepticism, saying that the tendency of the United States to import more than it exports is linked to larger economic factors, like saving and spending rates, not the terms of trade agreements.
Each side was likely to look to the other to articulate their goals for the renegotiation, said Wendy Cutler, the former chief U.S. negotiator for the deal. The United States will probably focus on areas of the agreement that it believes have not met its expectations — including trade in automobiles and financial services, Cutler said.
She noted that the Trump administration had not notified Congress of its intention to renegotiate the agreement — something that is required before substantial changes are made. That may suggest that the U.S. is not seeking to significantly alter the terms of the deal or that, although it is seeking changes from South Korea, it is not willing to make big concessions itself.
The United States Korea Free Trade Agreement, America’s largest trade pact after the North American Free Trade Agreement, was negotiated during President George W. Bush’s administration and signed in 2007. It set off protests from Koreans in 2008 over concerns about the safety of imported goods, such as beef. It was ratified by Congress in 2011, after President Barack Obama reworked the pact.
The deal opened South Korea, now America’s seventh-largest export market, to imports of U.S. agriculture, services and investment, and the U.S. market to Korean cars and other manufactured goods like washing machines.