As expected, the first meeting between Korean and U.S. negotiators to revisit their bilateral trade deal ended up as a staring contest Tuesday.
The two sides reaffirmed they had different views on the impact of the Korea-U.S. free trade agreement (KORUS FTA) and could not agree even on a date for their second meeting.
U.S. officials called for renegotiating the five-year-old free trade accord, which President Donald Trump described as a “horrible deal” destroying the U.S. economy. However, their South Korean counterparts made it clear they would not discuss its revision until and unless both sides look into what is causing the U.S. trade deficit.
America’s shortfall in two-way trade with Korea has more than doubled since the deal went into effect _ from $13.2 billion in 2011 to $27.6 billion last year. Washington thinks this is due to various nontariff barriers set up by Seoul while the latter says the gap could have been wider had it not been for the deal.
It remains to be seen whether the Office of the U.S. Trade Representative will agree to Seoul’s call for the joint study of the reasons for the trade imbalance. If Washington rejects the Korean proposal and demands to “negotiate or terminate” the deal, however, there will be limitations to Korea’s foot-dragging.
If the renegotiation eventually proves inevitable, the aphorism Korean officials should recall is “A good offense is the best defense.”
Korean negotiators should be able to use this as an opportunity to rectify poisonous provisions in the existing agreement, including the investor-state dispute (ISD) settlement clause and excessively strict protection of U.S. intellectual property rights, to help ease Seoul’s deficit in the services trade. If the U.S. side is reluctant to compromise, Korean officials need to be adamant enough to threaten to diversify the nation’s agricultural and energy import sources away from America.
The North Korean nuclear crisis is pushing tension on this divided peninsula to new highs. But that should be no reason for Seoul to put its economic interests far behind security matters, weakening its bargaining leverage and playing into the hands of the U.S. leader, the self-styled “artist of the deal.”