The Trump administration has launched an aggressive drive to renegotiate trade deals, but one country may manage to stymie major changes: South Korea.
The Trump administration has launched an aggressive drive to renegotiate U. S. trade deals, but one country may manage to stymie major changes: South Korea .
President Donald Trump during an April interview with the Washington Post called the U. S.-Korea Free Trade Agreement, known as Korus, a “horrible deal” that has “destroyed” his country, and he threatened to terminate it. A report in The Wall Street Journal on Saturday said the Trump administration could serve notice of withdrawal from the pact as early as next week.
U. S. Trade Representative Robert Lighthizer had sought a special meeting with South Korea on the deal in a bid to address the administration’s concerns about the U. S. goods trade deficit with the North Asian country.
That meeting ended last week with the USTR issuing a statement reiterating concerns that the U. S. goods deficit with South Korea had more than doubled from the 2012 implementation of the deal through 2016.
The USTR didn’t respond to CNBC’s request for comment.
On the South Korean side, however, Trade Minister Kim Hyun-chong, who was the country’s chief negotiator for Korus, said last week that the two sides had “different views, ” on both the cause of the goods deficit and whether there was a need to amend the deal.
The U. S. goods trade deficit with South Korea has certainly risen since the deal took effect. It’s gone from $13.2 billion in 2011, the last full year before implementation, to $27.6 billion in 2016, according to USTR figures. But it’s neither clear that Korus is to blame for that change, nor does that figure include the services component of trade, in which the U. S. has a surplus with South Korea.
Analysts pointed to several reasons the USTR might be on shaky ground when it came to trying to force through changes to the deal.
Deborah Elms, executive director at the Asian Trade Centre, pointed to one big problem with the USTR’s claim that Korus was causing a goods trade deficit: The sectors that were responsible for it, which were electronics and autos.
