South Korea says unclear if FTA is cause of trade imbalance

Posted July 14, 2017

"Since KORUS went into effect, our trade deficit in goods with Korea has doubled from US$13.2 billion to US$27.6 billion, while U.S. goods exports have actually gone down", he said.

"We think there is a higher chance that the two countries will make some changes rather than renegotiating the whole agreement since Washington used terms like revision and modification instead of renegotiation", said the Korea International Trade Association in a press release on Thursday.

As explained during a summit between President Moon Jae-in and President Donald Trump in June, the two sides "need to closely analyze and evaluate the effects of the (existing) South Korea-U.S. FTA after it went into effect and talk about whether the South Korea-U.S. FTA is the cause of the trade imbalance between the two countries", said the spokesman, Cho June-hyuck.

"We can and must do better", US Trade Representative Robert Lighthizer said in a statement.

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 United States in fact decreased".

SEOUL, South Korea (AP) - A South Korean Foreign Ministry spokesman has responded to a USA request for talks on the two countries' free-trade agreement by saying it's unclear if the pact is causing a growing imbalance.

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.

"This is quite different from what the previous administration sold to the American people when it urged approval of this agreement", he said.

Mr Trump in an interview in April was more blunt, calling it a "horrible deal" and a "one-way street".

"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. At the same time, imports from South Korea have increased by about 23%.

In order to amend a trade agreement with other countries, the United States administration should notify Congress 90 days before the commencement of the negotiation and report negotiation goals and strategy to the Congress 30 days before the commencement of the negotiation. But Schott points out that the USA runs a trade surplus with South Korea in services, such as banking and tourism.

"It's imperative that we work together to ensure that the economic partnership between our two countries is not only strong and vibrant, but also fair, and that the KORUS Agreement benefits the US economy as much as it does that of Korea", he said.