The Korea-US Free Trade Agreement (KORUS FTA) will play a crucial role in taking bilateral trade ties to a new level through a new trade platform designed to tackle challenges stemming from a rapidly changing market environment, a senior US envoy in Seoul said. The KORUS FTA, which marked its 10th year this month, has been the most comprehensive and high-standard trade agreement in the region.
“The KORUS represents a turning point in the US-Korea relationship building from our initial security alliance, a rock-solid security alliance for over 70 years,” said Andrew Herrup, the US Embassy’s acting deputy chief of mission during a joint The Korea Herald interview with the American Chamber of Commerce (AMCHAM) in Korea.
He said that the Korea-US trade relationship is broader now, and moving toward trade investment. The two countries are now “looking to move even further to collaborate on building out a set of norms and values that we will share in the region and more broadly,” Herrup said.
Since the free trade agreement took effect in March 2012, the value of the US’ goods and services exports to Korea has grown by over 17 percent to nearly $70 billion, according to the Ministry of Trade, Industry and Energy. Exports to the US from Korea surged 70.6 percent to $95.9 billion last year.
AMCHAM Chairman and CEO James Kim cited over a 600 percent increase in the number of US cars imported to South Korea as a key example of this growing trade relationship. He also noted the growing popularity of US-imported beef. “American beef is now the number one import here in South Korea,” he added.
As for South Korea, cars and auto parts accounted for the largest volume of its exports to the US, and has shown 75.5 percent growth from 11 years ago. US beef exports to Korea increased by 249 percent since 2011.
Amid the rapidly changing trade environment, the 10-year-old agreement now faces the need for a change to bolster mutual interests, they said. This could be done by forging a new set of partnerships on a new trade platform, the US-led Indo-Pacific Economic Framework.
“This (Biden-Harris) administration is looking at a worker-centered, worker-focused trade policy and building off KORUS, moving into IPEF. That’s where we will be heading for the next several years,” said Herrup.
IPEF, widely known as the US effort to bolster the US-Asia relationship to counter China’s growing economic influence in the region, however, has also raised concerns that it could be a risk for South Korea to choose sides between the two economic superpowers.
Diffusing such worries, Herrup stressed that the IPEF is not targeted at a country, but rather aims to spread transparency, good governance and market systems in the region.
“We will be looking at a variety of things: trade, supply chains, anti-corruption and tax, cleaner energy and decarbonization of industry. Mixed in with all of these four pillars is the nature of economic security,” Herrup said.
On concerns over growing risks of supply disruptions, the US envoy said he sees the problem closely tied to the lingering impact of COVID-19, not the Ukraine war.
“The initial reason why it’s such a big issue right now is the pandemic. The pandemic caused disruptions in supply chains, and that wasn’t caused by the action of any one nation. So putting aside causes for wider supply chain disruptions, we need to make sure that our two countries, as well as our partners, have access to the critical minerals we need and the supplies that are needed for these critical supply chains that are the basis of our economies now,” said Herrup.
In the course of progressing bilateral ties, AMCHAM Chairman James Kim said he sees a lot of business opportunities from the semiconductor industry. That is why securing the supply chain of chips together has grown far more important, he said.
Noting that South Korean companies poured $64 billion worth of foreign direct investment in the US in 2020 alone, Kim said, “That shows you that Korea loves America. America is a great market for Korean companies, and that’s just one side from the other side around.”
“South Korea represents a huge base for things that require semiconductors, and three of our most important member companies using the semiconductor business -- Qualcomm, Applied Materials, and Lam Research -- are here in Korea. They want to make big investments in Korea because they realize they create a very important market,” he said. Lam Research, a semiconductor equipment manufacturer, is set to open its research and development center in Yongin, Gyeonggi Province, on April 26.
As the country awaits the start of the incoming Yoon Suk-yeol administration in May, both AMCHAM and the US Embassy said they would continue to closely work with the new government to further economic bilateral cooperation.
Sharing about his previous meeting with the president-elect before the presidential election, Kim believes that Yoon will be a close friend to the US.
“We spoke about things like taxes, deregulation and really helping to make Korea a regional headquarters for multinational companies, which many US companies are already trying to do more of. So I look at him as someone who’s going to be very pro-business, very close to America,” said Kim.
Herrup arrived in Seoul in August last year following two years in Washington as deputy director for the Office of Southern African Affairs. Prior to that, from 2016 to 2019, he served as the deputy chief of mission at the US Embassy in Lilongwe, Malawi.
Kim has led AMCHAM Korea since 2014, and previously served as CEO of GM Korea.
By Hong Yoo (email@example.com