The Trump administration is seeking talks that could lead to the renegotiation of a free-trade agreement with South Korea. US Trade Rep. Robert Lighthizer said in a letter Wednesday to South Korean Trade Minister Joo Hyung-hwan that the United States wants to meet in order to discuss “possible amendments and modifications” to the pact that that went into effect five years ago under President Barack Obama. The terms of the trade deal call for the talks to begin within 30 days.
Obama had predicted that the pact would increase U.S. exports to South Korea, the world’s 11th-biggest economy. Instead, U.S. exports of goods to South Korea fell from 2011 to last year, and the U.S. trade deficit in goods with South Korea widened from $13.2 billion to $27.6 billion over the same period.
The Trump administration blames the rising trade gap on continuing South Korean barriers to U.S. exports, especially in the auto market. But other analysts cite South Korea’s sluggish economy and note that other countries have seen their exports to South Korea fall even more.
Jeffrey Schott, senior fellow in trade policy at the Peterson Institute for International Economics, says it would make sense to update the US-South Korea trade deal to cover emerging businesses such as e-commerce.
The administration focuses on trade in goods, like airplanes and washing machines. But Schott points out that the US runs a trade surplus with South Korea in services, such as banking and tourism. Including services, the overall trade deficit last year was $17.6 billion, a fraction of the deficits of $309.3 billion with China, $63.1 billion with Mexico and $57.1 billion with Japan.
President Donald Trump has criticized past trade deals and has already begun an effort to renegotiate the North American Free Trade Agreement with Mexico and Canada.