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South Korean exporters have been urged to put in place strategies to deal with potential changes to trading conditions with the United States.
A free trade agreement between the United State and Korea – KORUS - entered into force on March 15, 2012. Within three years, the deal was to remove cross-border tariffs on nearly 95 percent of trade in consumer and industrial products, with virtually all tariffs eventually eliminated within 10 years. The deal has recently drawn ire from US President Donald Trump, who referenced the significant trade deficit that has emerged since 2012. Observers have now begun to speculate whether the deal will survive the President's term.
A seminar hosted by the Korea International Trade Association (KITA) meeting in Seoul this week discussed the recent release of the 2017 US Trade Policy Agenda, which among other issues outlined the Trump Administration's stance on the dispute settlement procedures of the World Trade Organization (WTO) and the terms of the existing US free trade agreements (FTAs) with other states.
Although the Agenda was strongly focused on the trade relationship between the US and China, the report released by the Office of the US Trade Representative (USTR) revealed that one of the Administration's priorities will be the updating of current US trade agreements "as necessary to reflect changing times and market conditions."
Apart from focusing on the North American Free Trade Agreement, which the President has often attacked in the past, the Agenda also put the FTA with South Korea under a particular spotlight. It is noted that "the largest trade deal implemented during the Obama Administration has coincided with a dramatic increase in our trade deficit with that country. From 2011 to 2016, the total value of US goods exported to South Korea fell by USD1.2bn. Meanwhile, US imports of goods from South Korea grew by more than USD13bn. As a result, our trade deficit in goods with South Korea more than doubled."
"The Trump Administration believes in free and fair trade, and we are looking forward to developing deeper trading relationships with international partners who share that belief," the Agenda said. "But, going forward, we will tend to focus on bilateral negotiations, we will hold our trading partners to higher standards of fairness, and we will not hesitate to use all possible legal measures in response to trading partners that continue to engage in unfair activities."
According to Yonhap News, the KITA seminar, held on March 7, underlined concerns that the new Administration is expected to take a different stance to previous governments on these issues. It was highlighted that the trade disputes ongoing between China and the US, in particular in the steel industry, may hurt South Korean economic activities.
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