US reviews trade ties with Korea
The US trade relationship with South Korea is “falling short,” with the free-trade deal between the countries under review, Vice President Mike Pence said Tuesday.
“We’ll pursue trade that is both free and fair,” Pence said during remarks at a US business chamber gathering in Seoul. “And that’ll be true in all our trade relationships, including Korus,” he said, a reference to the US-South Korea deal.
“We’re reviewing all our trade agreements across the world to ensure they benefit our economy as much as they benefit our trading partners,” Pence said. “We have to be honest about where our trade relationship is falling short. Most concerning is the fact that the United States trade deficit with South Korea has more than doubled since Korus has come into effect.”
Pence’s visit to North Asia―he is now in Japan―was originally focused on economic and trade matters, though it has been overshadowed by tensions over North Korea’s weapons program. While Pence said on Monday he was “heartened” by signs from Beijing on helping rein in Pyongyang, the Trump administration continues to press China over its trade policies, and has targeted South Korea and Japan for alleged barriers to US automobile exports.
During Pence’s comments in Seoul he called the trade gap with South Korea a “hard truth,” with “too many” barriers to entry for US businesses.
Pence’s comments come just days after South Korea, the US’s sixth-largest trading partner, avoided being tagged a currency manipulator by the US Treasury, though it remains on a watch list of nations deemed at risk of engaging in unfair conduct. The US hasn’t named any country a manipulator since 1994.
During his election campaign, Donald Trump called the trade pact with Seoul, which came into effect five years ago, a destroyer of US auto industry jobs. South Korea is on a list of countries Trump has ordered probed for potential trade abuse, a process he said is aimed at cracking down on “foreign importers that cheat.” That study, announced in early April, is due to be completed within 90 days.
South Korea moved to downplay Pence’s remarks, with a government official in charge of trade matters noting the comments were directed at an audience of US business executives. The US is not singling out Seoul in its trade policy review encompassing a large number of countries, the official added, asking not to be identified given the sensitivity of the issue.
As part of its efforts to avoid the manipulator label and a major renegotiation of its trade deal, South Korea has announced plans to import more energy products from the US, while encouraging its companies to invest more in America.
In early March, Trade Minister Joo Hyung-hwan met Commerce Secretary Wilbur Ross in the US to set out the benefits of the trade pact from South Korea’s point of view. The two agreed to develop the deal “in a mutually beneficial way,” according to South Korea.
South Korea’s trade surplus with the US was $4.4 billion in the first three months of this year, down from $6.6 billion during the same period in 2016, according to Korea customs office data. For all of 2016, the surplus was $23 billion, it said.
The countries can agree in writing to amend their trade deal, while terminating it would require a six-month notice period.
South Korea argues that automobiles are a small fraction of total exports to America. The country sent 964,432 vehicles there in 2016, down 9.5 percent from the previous year, according to the Korea Automobile Manufacturers Association. Imports of US cars rose 22 percent to 60,099 units, it said.