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Trump pulls back from canceling of Korea-U.S. FTA

Sept 07,2017
The Donald Trump administration reportedly told lawmakers it is pulling back from terminating the Korea-U.S. free trade agreement for the time being, after Congressmen and business groups criticized the scrapping of the 5-year-old bilateral deal.

White House officials told senior members of Congress Tuesday and Wednesday that a plan to walk away from the Korea-U.S. FTA was no longer an immediate priority after internal discussions on the issue late last week, reported Fox Business News Wednesday.

Citing congressional aides, it added that the officials did not say that the idea of terminating the FTA had been permanently scrapped, but that it was no longer considered an “imminent action” as the Trump administration had been suggesting.

Inside U.S. Trade, an industry publication, reported that the White House told key lawmakers including House Speaker Paul Ryan that its threat to withdraw from the Korea-U.S. FTA has been taken off the table for now. But it reported, according to an unnamed source, that the business community has been asked by White House insiders to keep up its pressure against withdrawal because the president is “so unpredictable.”

The Washington Post on Saturday reported that Trump has been discussing with advisers the termination of the bilateral free trade pact, which he has in the past called a “horrible deal.”

The pact went into effect in 2012 under President Trump’s predecessor Barack Obama.
The Trump administration was reported to be hoping to begin the process as early as this week.

This comes at a highly sensitive period in the aftermath of North Korea’s sixth nuclear test Sunday, when cooperation between Seoul and Washington is particularly necessary.

Trump’s top aides, including U.S. National Security Advisor H.R. McMaster, Defense Secretary Jim Mattis and National Economic Council Director Gary Cohn, are said to have opposed scrapping the agreement.

A bipartisan and bicameral group of U.S. lawmakers issued a joint statement Wednesday against Washington’s withdrawal from the FTA with Seoul.

“North Korea's latest nuclear test underscores yet again the vital importance of the strong alliance between the United States and South Korea,” read the statement, which added that the bilateral agreement, negotiated under two presidents and approved by the U.S. Congress, “is a central element of that alliance.”

It went onto describe Korea as “a significant economic partner,” the United States’ seventh largest export market and “a vital customer for U.S. manufacturers, services providers, farmers, and ranchers.”

The statement was issued by Republican Rep. Kevin Brady of Texas, chairman of the House Ways and Means Committee, Rep. Richard Neal, a Democrat of Massachusetts, Republican Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee, and Democratic Sen. Ron Wyden of Oregon.

They said the United States “must press South Korea to improve its implementation and compliance” and welcomed discussions to strengthen bilateral economic ties to enhance their trade relationship.

The statement continued, “To be effective and constructive, however, we must not withdraw from the agreement while we do so.”
The U.S. Chamber of Commerce also said it opposes Washington’s withdrawal from the Korea-U.S. FTA “in the strongest possible terms,” urging the Trump administration “not to make this rash and irresponsible move.”

A statement issued by U.S. Chamber President and CEO Thomas J. Donohue on Tuesday continued, “We do not believe this move would create a single American job — but it would cost many.”

It went onto say that the FTA has “boosted U.S. exports in a number of areas, and many of these would be at risk as Korea restored tariffs against U.S. exports.” It said U.S. aerospace exports to Korea have doubled to $8 billion, American services exports have increased to more than $21 billion and exports of key agricultural products also have “soared” under the deal with Korea.

“It’s difficult to imagine a move that would bring more self-harm to our economy and national security, with no benefit in return, than withdrawing” from the Korea-U.S. FTA, it added.

Trump forecast FTA renegotiations as he declared on June 30 after his first summit with President Moon Jae-in at the White House: “The fact is that the United States has trade deficits with many, many countries and we cannot allow that to continue. And we’ll start with South Korea right now.”

The United States Trade Representative (USTR) on July 12 made a formal request calling for a joint meeting to discuss revisions to the bilateral agreement.

Korean and U.S. trade representatives failed to reach an agreement after holding a special session on Aug. 22.
U.S. Trade Representative Robert Lighthizer said at a press conference Tuesday, “South Korea and the U.S. are negotiating and we are hoping for some amendments to the agreement.” Those remarks likewise suggested the USTR is considering negotiations on revisions of the deal rather than a scrapping of the FTA.

House Foreign Affairs Committee Chairman Ed Royce, a Republican of California, led a bipartisan congressional trip to Seoul last week and told the Korea JoongAng Daily that the bilateral FTA “has been a win-win” for both Korean and U.S. businesses and workers.

He added, “The existing framework should be the foundation, and if there are specific instances on the U.S. side or Korea side where there is a lack of enforcement or some issue that needs be addressed,” it should be “worked out between the U.S. and Korea.”

BY SARAH KIM [kim.sarah@joongang.co.kr]