As we have reported previously, United States Trade Representative (USTR) Robert Lighthizer formally notified Korea in July that the U.S. requested a special Joint Committee meeting under the U.S.-Korea Free Trade Agreement (KORUS) to start the process of negotiating to remove barriers to U.S. trade and consider amendments to the agreement. USTR’s action was consistent with the Trump Administration’s stated objective of reducing the trade deficit. KORUS entered into force in March 2002 and, from 2011 to 2016, the U.S. trade deficit in goods with Korea more than doubled from $13.2 billion to $27.6 billion. This edition provides you with an update on the current status of KORUS renegotiations.
KORUS Joint Committee special sessions took place in Seoul, South Korea, on August 22, 2017, and in Washington, D.C., on October 4, 2017. At the conclusion of last month’s session, USTR Lighthizer stated that he “initiated Joint Committee discussions at the direction of the President to improve outcomes under this agreement for all Americans. 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.”
The KORUS Joint Committee second special session concluded on the eve of President Trump’s first visit to Asia. The President’s itinerary includes a stop in the Republic of Korea on November 7. According to the White House, President Trump “will participate in a bilateral meeting with President Moon Jae-in and visit American and South Korean service members. The President will speak at the National Assembly, where he will celebrate the enduring alliance and friendship between the United States and the Republic of Korea, and call on the international community to join together in maximizing pressure on North Korea.”
Press reports in South Korea indicate that aspects of the KORUS renegotiations will be discussed by President Moon-Jae and Trump, and that formal negotiations may commence “as early as January” 2018. Events that must take place in South Korea prior to the commencement of formal negotiations include an economic feasibility study, public hearings, and reports to the National Assembly.
Although the United States predicated its decision to call for KORUS renegotiations in large part due to the significant U.S. trade deficit in goods with Korea, the South Korean Minister of Agriculture, Food and Rural Affairs, Kim Yung-rok, recently indicated that South Korea also will emphasize its own trade imbalance with the United States in key sectors, including agriculture. Minister Kim Yung-rok stated that “the imbalance in trade is already huge in agriculture. While Korea exported $700 million worth of goods to the United States, imports stood at $6.8 billion.” The negotiations are expected to address other areas, however, including market access. For example, press reports indicate that the United States has communicated its intention to push South Korea to relax certain data localization requirements that impact cloud server management options in the financial services sector.
More generally, KORUS renegotiations are increasingly a focus of domestic political discourse in South Korea, especially by leadership in the opposition parties. Other stakeholders have urged the South Korean government to take KORUS renegotiations very seriously because the Trump Administration could attempt to use the potential for withdrawal from KORUS as leverage in other international trade negotiations, including ongoing talks with China and the North American Free Trade Agreement Parties.
We will provide additional updates regarding KORUS renegotiations in future editions.
