<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">INSIDE US TRADE<o:p class=""></o:p></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></div><h1 style="margin-right: 0in; margin-left: 0in; font-size: 24pt; font-family: 'Times New Roman', serif;" class="">USTR request for joint committee meeting on KORUS does not call for a 'renegotiation'<o:p class=""></o:p></h1><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class="">July 12, 2017 <o:p class=""></o:p></div><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">U.S. Trade Representative Robert Lighthizer has officially conveyed to Korea the Trump administration's request for a special session of a U.S.-Korea Free Trade Agreement joint committee, calling for the deal to be modified rather than renegotiated.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">“I believe that this session and the follow-up negotiations will provide an opportunity to review progress on the implementation of the Agreement, resolve several problems regarding market access in Korea for U.S. exports, and, most importantly, address our significant trade imbalance,” Lighthizer wrote in <a href="https://insidetrade.com/sites/insidetrade.com/files/documents/jul2017/wto2017_0228.pdf" style="color: rgb(149, 79, 114);" class="">a July 12 letter to the Korean Ministry of Trade, Industry and Energy</a>.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The letter – <a href="https://insidetrade.com/node/159493" style="color: rgb(149, 79, 114);" class="">which <em class=""><span style="color: blue;" class="">Inside U.S. Trade</span></em> reported was imminent</a> earlier on Wednesday – calls for the special session of the trade deal's joint committee to “consider matters affecting the operation of the Agreement, including possible amendments and modifications.” KORUS holds that if a special session is requested, it must be held within 30 days.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The language in the letter could mollify some in the business community and on Capitol Hill who worried the administration would call for a full-fledged renegotiation of KORUS, which could have angered Korea.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">President Trump said in late June that the U.S. and Korea were renegotiating the deal “right now.” He earlier threatened to terminate it if new terms could not be agreed to.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">A source said an insistence on the word “renegotiation” could be “toxic” for Korea.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Sources who earlier told<em class=""> Inside U.S. Trade</em> the letter would likely call for a renegotiation instead of a modernization said later on Wednesday the letter’s final language was a “very good” development. One source said it was an indication that the administration is being “sensitive to the severe political challenge that word would have engendered and the challenge they would have faced with congressional committees of jurisdiction.”<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class=""><strong class="">In the letter, Lighthizer calls Korea an important ally and trading partner, but adds that “in order to strengthen our relationship, we need free, fair and balanced trade.”</strong><o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">KORUS, he adds, must benefit the U.S. economy as much as it does that of Korea.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Noting the Trump administration's focus on reducing trade deficits, Lighthizer says “we have real concerns about our significant trade imbalance with Korea.”<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The U.S., he noted, has had a “persistent goods deficit with Korea for nearly two decades. When the KORUS Agreement was negotiated, expectations were high that both of our economies would realize significant gains.”<br class=""><br class="">That hasn't happened, Lighthizer continues, adding that the goods deficit has “doubled” since KORUS went into force.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">“It is critical that we achieve real progress that fosters a truly fair and level playing field, and a more balanced trade relationship,” Lighthizer adds.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The letter proposes that U.S. and Korean officials meet soon to agree on a date for the special session.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">Sources said last week that the first-ever request for the special session might hold until Korea's new trade minister took office. On July 3 – the day the administration confirmed it wanted a special session – South Korean President Moon-Jae tapped Paik Un-gyu, an engineering expert, to serve as minister of trade, industry and energy.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">While Paik does not require parliamentary approval, hearings must be held and a reorganization bill passed before he and other cabinet members can be approved. The special session of Korea’s national assembly ends on July 18, and sources said it was unlikely that Korean lawmakers could pass the bill by then.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">That did not deter the administration from seeking the special session this week under KORUS Article 22.2., which says the joint committee can be co-chaired by the USTR and the Minister for Trade of Korea, “or their respective designees.”<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The letter is addressed to the current minister of trade, industry and energy, Joo Hyunghwan, who has consistently defended the deal as a contributor to bilateral trade growth since its implementation in 2012.<o:p class=""></o:p></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif;" class="">The Ministry of Trade, Industry and Energy likely will have to choose a designee for the session; sources said Seoul to date has not decided who will be responsible for the file. – <em class="">Jenny Leonard</em> (<a href="mailto:jleonard@iwpnews.com" style="color: rgb(149, 79, 114);" class="">jleonard@iwpnews.com</a>) <em class="">and Dan Dupont</em> (<a href="mailto:ddupont@iwpnews.com" style="color: rgb(149, 79, 114);" class="">ddupont@iwpnews.com</a>)<o:p class=""></o:p></p><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></div></body></html>