The South Korean government maintains it is confident of challenging U.S. claims that trade imbalance worsened under the bilateral free trade agreement between the two countries, the primary reason Washington is demanding “amendments and modifications” in the five-year pact.
In a letter to the Korean trade minister, U.S. Trade Representative Robert Lighthizer called for a joint committee meeting in Washington to address mostly the “significant trade imbalance.”
He claimed the U.S. trade deficit has doubled since the agreement took effect five years ago and called for review of the pact to balance level field without outright mentioning “renegotiation.”
But Korea’s Ministry of Trade, Industry and Energy on Thursday said it has sufficient data to refute against the claims.
Korea’s trade surplus with the U.S. fell 38 percent on year to $8.16 billion in the first six months this year. U.S. goods exports to Korea rose 22 percent as demand for chip manufacturing equipment and machinery increased in parallel with the spike in Korean chip supplies.
Imports from the U.S. have been increasing against the year-ago period for the last eight months.
Korea’s trade surplus with the U.S. increased under the FTA. It has fallen to $23.2 billion last year after peaking at $25.8 billion in 2015.
Seoul also points to the ballooning service deficit with the U.S.
Surplus in commodity trade doubled from $11.6 billion in 2011 to $23.3 billion last year as Washington claimed. During the same period, U.S. surplus in services soared 33 percent from $10.9 billion to $14.3 billion. In the current balance that includes both commodity and services trade, Korea’s surplus stopped at $9 billion.
Moreover, the commodity balance between the two countries does not include weapons trade for security reasons.
South Korea is the world’s biggest buyer of U.S. weapons. From 2012 to 2015, imports of U.S. arms averaged 5 trillion won, compared with 676.2 billion in 2011 before the FTA took effect.
According to the Defense Acquisition Program Administration, Korea purchased more than $5 billion worth of U.S. weaponry last year.
In short, Korea would have actually registered $4 billion in trade surplus with the U.S. last year, not $20 billion like President Donald Trump claims, who accused the FTA of being a “horrible deal.”
By Boo Jang-won
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]