Trump to fix S Korea trade deal, wants missile system payment
POLICY SHIFT: Trump called the five-year-old trade pact ‘unacceptable’ and said it would be targeted for renegotiation after his administration completes a revamp of the Nafta
WASHINGTON: US President Donald Trump said on Thursday he will either renegotiate or terminate what he called a “horrible” free trade deal with South Korea and said Seoul should pay for a US anti-missile system that he priced at $1 billion.
In an interview, Trump called the five-year-old trade pact with South Korea “unacceptable” and said it would be targeted for renegotiation after his administration completes a revamp of the North American Free Trade Agreement (Nafta) with Canada and Mexico.
He blamed the US-Korean trade deal, known as KORUS, on his 2016 Democratic presidential election opponent, Hillary Clinton, who as secretary of state promoted the final version of the trade pact before its approval by Congress in 2011.
“It is unacceptable, it is a horrible deal made by Hillary,” the Republican Trump said. “It’s a horrible deal, and we are going to renegotiate that deal or terminate it.”
Asked when he would announce his intention to renegotiate the deal, Trump said: “Very soon. I’m announcing it now.”
Trump’s comments stunned South Korean financial markets, sending Seoul stocks and the won currency into reverse even as the country’s economic outlook has started to brighten.
South Korea’s foreign ministry said Seoul would continue to explain to the Trump administration the benefits of the free agreement (FTA) for both countries.
Washington had not officially filed a request to Seoul to renegotiate the agreement, it said.
“Our government will keep monitoring the situation and continue our effort to explain to the United States the mutually reciprocal outcome of South Korea-US FTA, while preparing for countermeasures,” the ministry said.
With global demand improving, exports of goods such as cars and electronics have been leading a recovery in South Korea and a number of other trade-reliant Asian economies such as Japan and Taiwan, boosting their manufacturing sectors.
“Talk and actual policy are different,” a high-ranking official at South Korea’s finance ministry, who declined to be identified as he is not authorized to speak to the media, said.
KORUS was initially negotiated by the Republican administration of president George W Bush in 2007, but that version was scrapped and renegotiated by president Barack Obama’s Democratic administration three years later.
The US goods trade deficit with South Korea has more than doubled since KORUS took effect in March 2012, from $13.2 billion in 2011 to $27.7 billion in 2016, according to US Census Bureau data.
Trump said the Terminal HighAltitude Area Defence (THAAD) missile system now being deployed in South Korea to defend against a potential missile attack from North Korea would cost about $1 billion and questioned why the United States was paying for it.
“I informed South Korea it would be appropriate if they paid. It’s a billion-dollar system,” Trump said.
“It’s phenomenal, shoots missiles right out of the sky.”
Asked about the remarks, South Korea’s defence ministry said in a statement there was no change to the existing agreement that Seoul provides land for the deployment while Washington shoulders the cost of installing and operating the system.