U.S. wants Korea to pay the bill for KORUS FTA

In Tuesday’s speech at the American Chamber of Commerce and Industry, U.S. Vice President Mike Pence said that the Trump administration will review and reform the free trade agreement between the U.S. and Korea. He said that “The most worrisome fact is that the U.S. trade deficit had more than doubled since the free trade agreement began between the two countries and there are too many barriers for U.S. businesses in the country.” It is now inevitable to negotiate the U.S.-Korea FTA again as a person in the highest rank in the U.S. visited and directly mentioned on the reform and review.

Mr. Pence said the previous day, “We are with you 100 percent.” He completely changed his stance in a day and now announce to renegotiate the KORUS FTA. Feeling disturbed may be a Korean sentiment. To U.S. President Donald Trump, the negotiation genius, however, improving unfavorable balance of trade in return for protecting the country from North Korea’s nuclear threats can be considered as an option that the both sides can win. It is the same argument that Trump used to persuade Chinese President Xi Jinping and the argument goes as saying not to include China from its list of countries manipulating foreign exchange rate in exchange for pressuring the North. Trump accused China of "raping" the U.S. with unfair trade policy.

Korea should be prepared for the FTA renegotiation since Trump criticized the FTA as a U.S. job killer during his presidential campaign. The Korea International Trade Association’s March report should be delivered to the U.S. and the report said that the world trade volume declined by 2 percent but the U.S.-Korea trade increased 1.7 percent for the same period of the recent five years, despite sluggish global economy. When the U.S. Trade Representative (USTR) published a report in March, which says to review the existing negotiations, however, the Ministry of Trade, Industry and Energy dismissed the meaning as minor, saying that USTR report did not indicate the renegotiation of the KORUS FTA. Both the Trade Ministry and Foreign Ministry said the U.S. vice president’s comment meant a fine-tuning, not a renegotiation. However, it is nothing more than a wishful thinking.

Trump emphasized “America First” policy as his campaign promise and now he is committed to a foreign policy focused on American interests as the president of the US. For Trump, there is no free lunch as his administration regards security and economy as a subject of trade. Japanese Prime Minister Shinzo Abe visited Washington D.C. with gifts that guarantees the creation of 700,000 jobs and investment on the infrastructure worth 7 billion dollars and returned to Japan with a promise of reinforcing the U.S.-Japan Defense Treaty. The government has no time to waste now. It should persuade the U.S. that the current U.S.-Korea FTA mutually provide benefits to both sides and come up with measures that would maximize national interests.

During the 2012 presidential election, Moon Jae-in, presidential candidate of the Minjoo Party, had argued to renegotiate the KORUS FTA. The Lee Myung-bak government overturned its stance on the FTA, which the former Roh Moo-hyun administration had agreed. Mr. Moon should be clear about his stance on the U.S.-Korea FTA at the moment that the U.S. asked to review for its loss on bilateral trade.