US Vice President Pence says Washington will “reform” of Korea-US FTA

2017.04.19 14:15:54 | 2017.04.19 14:16:29
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U.S. Vice President Mike Pence visiting Seoul to demonstrate U.S. force and will on security alliance against escalated North Korean provocations pointed to the imbalance in bilateral trade to suggest Washington was mulling to “reform” the Korea-U.S. free trade agreement.

“Despite the strong economic ties between the United States and South Korea, we have to be honest about where our trade relationship is falling short,” Pence said Tuesday during a visit to the American Chamber of Commerce (AMCHAM) on his last day in Korea. “Most concerning is the fact that the U.S. trade deficit with South Korea has more than doubled since the KORUS came into effect. That`s the hard truth,” he added.

“U.S. businesses continue to face too many barriers to entry, which tilts the playing field against the American workers and American growth,” he said.

President Donald Trump under “American First” slogan and policy direction is “reviewing all of our trade agreements across to ensure they benefit our economy as much as they benefit our trading partners.”

“We will move toward a system that maximizes jobs and growth and bright future of both countries. We will work with you toward that end as we reform KORUS (Korea-U.S FTA) in the days ahead,” he said.

“The U.S. will pursue trade that is both free and fair, and reviews are done to ensure that they benefit our economies as much as they benefit our trading partners," he added.

After tumultuous negotiations, a FTA between the two countries was signed in June, 2007 and finally took effect in March, 2012.

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Trump during campaigning pledged to revisit and renegotiate trade pacts to place U.S. interests first and also criticized the FTA with Korea for killing American jobs. Pence is the first from the Trump administration to mention a possible revisit to the bilateral trade deal with Korea.

Both Korean foreign and trade ministries brushed aside hyped concerns over his comments, noting Pence said “reform” instead of “revise” and words like “days ahead” and “walk toward” to reason that actions won’t take place immediately.

If Washington makes an official request to renegotiate the trade terms, the government would respond to it to enhance “mutual benefits”, according to an official from the government. “The government has been putting its utmost efforts to keep the country’s trade surplus with the U.S. below $20 billion,” he added.

Korea’s trade surplus with the U.S. totaled $23.3 billion, down from $33.8 billion in 2015. Before the FTA, surplus had been $11.6 billion in 2011.

The Korean government has been seeking ways to cut its trade surplus with the U.S. to avoid the country’s official request to renegotiate the terms of the trade pact by implementing measures including importing more U.S. goods, especially shale gas.

The auto industry would be the most at risk as Korea’s trade surplus with the U.S. in car exports almost doubled from $8.3 billion in 2011 to $16.3 billion in 2015. There would also be a growing pressure from Washington on Seoul to open its agriculture, livestock and fishery markets and to expand imports of U.S. beef. The U.S. may ask for a cut in conventional tariffs on some products like beef, oranges and rice.

On Monday, during a press conference with Korean acting president and Prime Minister Hwang Kyo-ahn, Pence emphasized that Washington’s commitment to the security alliance with Korea is “ironclad and immutable.”

By Ko Jae-man and Park Tae-in

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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