Washington: Scrapping the US-South Korean trade agreement would be a rash mistake, the US Chamber of Commerce said on Tuesday, ahead of a first meeting this week between US President Donald Trump and new South Korean President Moon Jae-in.
In an interview with Reuters in April, Trump called the five-year-old KORUS trade pact “horrible” and “unacceptable” and said he would either renegotiate or terminate it.
US Chamber of Commerce executive vice president Myron Brilliant said US exports to South Korea had not risen as much as expected and the US trade deficit had grown, but these we not reasons to end the agreement.
“Such a rash move would be a mistake,” Brilliant said in an op-ed article published on Tuesday, a day before Moon is due in Washington. Moon will speak at the chamber on Wednesday evening.
Brilliant said services exports to South Korea had jumped 25% to more than $21 billion annually, while merchandise trade numbers were also “moving in the right direction.”
With more South Korean tariffs set for elimination over the next few years, US exports would be even more competitive.
In addition, Brilliant wrote, KORUS put American exporters on a level playing field against competitors from Europe, China and Australia, which also have free trade agreements with Seoul.
“Without KORUS, US exports of agricultural and manufactured products, as well as services, would likely have fallen substantially over the past five years,” he said.
Brilliant said that to the extent KORUS had fallen short, it was in enforcement. He said Trump and Moon, who will meet on Thursday and Friday, should use their summit “to recommit to full compliance with both the letter and spirit” of the deal.
“Reopening the agreement could lead to its unravelling, which would only benefit our trade competitors,” Brilliant said. Adding economic uncertainty to the relationship would also make security cooperation on the North Korean issue more complicated, he said.
KORUS was initially negotiated by the President George W. Bush administration in 2007, but was scrapped and renegotiated under President Barack Obama three years later.
The US goods trade deficit with South Korea has more than doubled since KORUS took effect in 2012, from $13.2 billion in 2011 to $27.7 billion in 2016. It was forecast to boost US exports by $10 billion a year, but they were $3 billion lower in 2016 than in 2011.
Many trade experts have blamed the weak South Korean economy, which has depressed demand for imports, but critics say non-tariff barriers have limited US penetration of the South Korean market, particularly for automobiles.
The pact also lacks an enforceable provision to deter currency manipulation. South Korea remains on the US Treasury “monitoring list” for its currency practices.