[CTC] U.S., South Korea Announce Plans to Tweak Trade

Thu Oct 5 10:59:21 PDT 2017

https://www.usnews.com/news/economy/articles/2017-10-05/lighthizer-gains-ground-as-south-korea-agrees-to-tweak-trade-agreement <https://www.usnews.com/news/economy/articles/2017-10-05/lighthizer-gains-ground-as-south-korea-agrees-to-tweak-trade-agreement>

U.S., South Korea Announce Plans to Tweak Trade
South Korea has agreed to alter a free trade agreement with the U.S. rather than have the U.S. withdraw entirely.

By Andrew Soergel, Economy Reporter |Oct. 5, 2017, at 10:59 a.m.

U.S., South Korea Announce Plans to Tweak Trade

South Korea and the U.S. are expected to begin tweaking a five-year-old trade deal that President Donald Trump previously threatened to terminate. Ahn Young-joon/AP

Despite weeks of South Korean skepticism over the prospects of retooling its trade agreement with the U.S., the two sides appeared to make headway Wednesday as Seoul's trade ministry identified a need to "amend" and "enhance mutual benefits" related to bilateral trade.

U.S. Trade Representative Robert Lighthizer has been in discussions with his South Korean counterparts since August about the possibility of reshaping the five-year-old U.S.-Korea Free Trade Agreement, or KORUS, in a manner that would be more favorable to America's swelling trade deficit.

"I now look forward to intensified engagement with Korea in an expeditious manner to resolve outstanding implementation issues as well as to engage soon on amendments that will lead to fair, reciprocal trade," Lighthizer said in a statement Wednesday.

The apparent negotiation progress is expected to calm fears that the U.S. could torpedo the Obama-era trade deal. Reports surfaced in August that South Korea wasn't particularly eager to cede ground on the trade front as rumors swirled that President Donald Trump's administration could withdraw from the deal entirely.

Trump said in an April interview with The Washington Post that KORUS was a "horrible deal" and "a Hillary Clinton disaster – a deal that should've never been made."

"We've told them that we'll either terminate or negotiate," Trump said at the time.

New data released Thursday by the Bureau of Economic Analysis showed America's deficit with South Korea in terms of goods and services fell considerably during the second quarter of 2017, from $3.75 billion in the first quarter to just $1.5 billion in April, May and June. America's deficit with the entire world in August ultimately narrowed to $42.4 billion – its lowest level in 11 months.

Trump's administration, however, has been more interested in looking at goods trade balances, specifically, rather than focusing on services – a commerce category in which the U.S. actually maintains a surplus with Seoul, along with many other countries.

America's goods deficit with South Korea improved between January and August of this year compared with the same window in 2017. But it still sat north of $15 billion through August and clocked in at nearly $27.6 billion in 2016, according to the Census Bureau.

In 2011, the year before KORUS was signed, America's deficit with South Korea registered nearly $13.2 billion. U.S. exports to the country haven't wavered significantly year-to-year and are actually up in 2017. So the deficit increase has mostly been driven by the U.S. buying more goods from Seoul than it did in years past.

How exactly Lighthizer plans to retool the trade agreement remains to be seen – though many have speculated Trump will target automotive manufacturing. Trump has previously gravitated toward addressing auto imbalances with Canada and Mexico by retooling the North America Free Trade Agreement. And Lighthizer's office drew attention to the sector in its Wednesday release.

"The U.S. deficit in the autos sector alone is $24 billion, an increase of 77 percent since 2011 and accounting for nearly 90 percent of the total $27.6 billion goods deficit in 2016," the statement said.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20171005/888861ec/attachment-0001.html>