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Korea cautious on US’ request for FTA amendment

The South Korean government on Thursday reacted cautiously to the US’ formal request to hold a joint meeting to revise the Korea-US free trade agreement within the next month, saying the timeline may not be realistically possible and that searching for the real cause of the US’ trade deficit was a priority.

The Ministry of Trade, Industry and Energy also said that it would call on its US counterpart to first review the root causes of the trade imbalance between the two countries. The ministry will send a senior official to the US to discuss the agenda and timing of the special committee meeting, it said in a statement.

On Thursday, under the direction of US President Donald Trump, Trade Rep. Robert Lighthizer formally notified Korea that the US was calling a special joint committee meeting within the next 30 days to start revising certain parts of the Korea-US FTA. The notification did not use the term “renegotiation.”

A Cheong Wa Dae official told reporters later in the day that the government may need more than 30 days to attend the proposed joint committee due to the country’s ongoing governmental restructuring and reorganization. The official stated that the Moon Jae-in administration was looking to hold off all trade negotiations until after the country’s new trade minister has been appointed.

In a meeting with his aides the same day, President Moon Jae-in was quoted as saying, “Let’s not leave anything to prediction and be prepared for all possibilities.”


     Specifying the trade status of the two countries, Moon also reportedly 
said, “In the past five years since the FTA was effectuated, our auto exports to the US in fact decreased. … In comparison, Korea’s imports from the US increased. … How should this be viewed as the FTA adding to the US’ trade deficit?”

Moon went on to say that the administration should thoroughly review the intention behind Washington’s demand for revision and stand up for Seoul’s position.

In a formal letter addressed to Joo Hyung-hwan, the minister of trade, industry and energy, Lighthizer called for the special Joint Committee Meeting to take place in Washington, adding that that US has been suffering from a persistent deficit in goods trade with Korea.

Following the notification, Korea’s Trade Ministry released a statement saying, “As we suggested at the Korea-US summit last month, the Korean government’s stance is that it necessary for working-level officials from the two countries to first study, analyze and assess the effects of the Korea-US FTA to establish the reasons behind bilateral trade imbalance.”

However, the ministry stressed that a joint committee does mean bilateral renegotiations have started, as creating a task force to alter the FTA requires Seoul’s consent.

The Seoul government also emphasized that Lighthizer’s letter did not use the term “renegotiation,” but rather used terms such as “amendments” and “modifications.” Despite President Trump last month publicly stating that renegotiations were already underway between the two countries -- a statement that was shot down by the Korean government -- the language used in the US’ official notification to Korea steered clear of the term “renegotiate.”

It is presumed that President Trump continued to use the term renegotiation, as opposed to the more accurate “amend” or “revision,” in an effort to give his statements added nuance that he would be able completely overhaul the trade deal.

A Cheong Wa Dae official, in a separate briefing, said, “The US has every right to demand a revision to the FTA if they deem there is need for it. … But our clear position is that the KORUS FTA cannot be the cause for the US’ trade deficit from Korea and that we should check and review this together with the US.”

The official added that Korea first needs to designate its trade minister, which may take time.

In Lighthizer’s official notification letter to Minster Joo, he stated, “Korea is an important ally and key trading partner and in order to strengthen our relationship, we need free, fair and balanced trade.

“A key focus of the Trump Administration is on reducing our trade deficits with trading partners around the world, and we have real concerns about our significant trade imbalance with Korea,” he added.

Lighthizer went on to say that expectations were high that both economies would realize significant gains at the start but that the overall deficit with Korea has increased, and their goods deficit has doubled since the agreement entered into force.

In a press release by the office of the US Trade Representative, Washington highlighted that since the KORUS FTA went into effect, the US’ trade deficit in goods with Korea has doubled from $13.2 billion to $27.6 billion, while US goods exports have gone down. The statement also claimed the results of the FTA were different from what the Obama administration “sold” to the American people as he urged its approval.

Ever since Trump made public his intention to alter the terms of the FTA last year, referring to it as a “horrible deal,” there has been widespread disparities among experts from both sides. While the US continues to blame the country for its deepening trade deficit, Korea argues the trade agreement is mutually beneficial.

The US Chamber of Commerce also released a press statement Thursday in defense of the KORUS FTA, saying the agreement has “supported American exports such as agricultural products, manufactured goods and services.” 

“The Chamber looks forward to working with the administration to identify possible ways to improve implementation and enforcement and to ensure that the agreement delivers on its potential to create jobs and grow our economy,” said US Chamber Senior Vice President for Asia Tami Overby.

During the recent Washington summit last month, President Moon Jae-in revealed that US officials emphasized the country’s trade deficit in the auto and steel industries, alluding to a possible push by the Trump administration for changes in those sectors.  

However, according to NTE Report, US automobile exports to Korea increased by 280 percent from 2011 to 2016, from $418 million in 2011 to $1.6 billion in 2016.

The data also showed that exports of American vehicles to Korea increased 20 times faster than US automobile exports to the world over the same period, meaning Korea currently stands as the United States’ eighth-largest export market by value, up from the 17th-largest market in 2011.

By Julie Jackson (
Korea Herald Youtube