Wednesday, 05 July 2017 00:00

U.S. to Seek Revisions to Korea FTA

Sandler, Travis & Rosenberg Trade Report | Thursday, July 06, 2017

The Trump administration is reportedly moving to launch a process to revise the U.S.-Korea free trade agreement. However, details on when talks may begin and the administration’s objectives remain unclear.

Following a recent meeting with Korean President Moon Jae-in at the White House, President Trump said the KORUS agreement has been “a rough deal” for the U.S., noting that the U.S. trade deficit with Korea has doubled since the FTA took effect in 2012. Trump said the U.S. will address this situation by revamping the agreement, which “will be much different and will be good for both parties.”

While Trump said the U.S. is “renegotiating [KORUS] right now as we speak,” administration officials later clarified that Trump is directing U.S. Trade Representative Robert Lighthizer to request the first-ever special session of a joint committee provided for under the FTA to “start the process of renegotiating and amending the deal.” Korea apparently cannot decline such a request, and the meeting would have to be conducted within 30 days. Moon asserted that the agreement has been “mutually beneficial” to date but said “if there are ways that it has gotten out of kilter we will address it.”

Although there have so far been few details on what changes the U.S. plans to seek, during his conversation with Moon, Trump focused on increasing U.S. exports of automobiles to Korea and curbing its “export of dumped steel” to the U.S. market. Commerce Secretary Wilbur Ross explained that the “largest single component” of the U.S. trade deficit with Korea “is automotive trade,” where Korea allows in “only 25,000 cars per Big Three manufacturer … based on U.S. standards” and requires any additional vehicles to comply with Korean standards. Ross also said that Korean exports of oil country tubular goods to the U.S. are being made with “dumped Chinese steel.”


 
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