UPDATE — 6:51 p.m. EDT: Top Republican and Democratic members of the Senate finance and the House ways and means committees issued a joint statement Tuesday urging the White House to remain in the U.S.-South Korean trade agreement (KORUS) established in 2012.
While the group said U.S. businesses have had issues with Seoul’s adherence to the agreement, it suggested further talks to resolve outstanding problems instead of withdrawal.
“North Korea’s latest nuclear test underscores yet again the vital importance of the strong alliance between the United States and South Korea,” the statement read. “(KORUS), negotiated under two presidents and approved by Congress, is a central element of that alliance”.
In the midst of regional turmoil on the Korean Peninsula, President Trump is reported to be considering the fate of a five-year trade deal with South Korea with advisers.
Trump has made the renegotiation of key trade agreements the core of his policy agenda during his White House tenure.
Asked if the trade deal with South Korea would be part of discussions while visiting Houston over the weekend, Trump responded: “It is very much on my mind.”
President Trump had requested in July both Seoul and Washington meet to discuss “possible amendments and modifications” to the The U.S.-Korea Free Trade Agreement (KORUS).
Originally negotiated by the Bush White House in 2007, the deal was overhauled by the Obama administration three years later.
Then-candidate Trump had repeatedly blasted U.S. trade agreements and particularly singled out agreements which carried significant trade deficits during the 2016 presidential campaign. The U.S. currently runs a $29.7 billion trade deficit with South Korea.
Under the current agreement with Seoul, tariffs were greatly reduced on a majority of consumer and industrial goods, notably automobiles and agricultural products. The pact immediately removed eight percent off the top of semiconductor manufacturing machines, autos and pharmaceuticals to Korea.
Despite the drop in levies, American beef products sustained only a marginal drop in tax from 40 percent to 24 percent. Other goods, such as cellphones and semiconductor chips, flowed into the U.S. freely.
Following the agreement going into effect, the U.S. trade deficit with Seoul nearly doubled.
Although Trump has signaled his willingness to scrap trade agreements, particularly the Trans-Pacific Partnership (TPP), it is known any move to abandon the agreement with Seoul will be met with opposition from top aides. White House advisers Gary Cohn, Defense Secretary James Mattis and National Security Adviser H.R. McMaster are reportedly cautioning Trump against the move, particularly in face of North Korea’s recent nuclear test.
Withdrawal from KORUS is also receiving opposition from business organizations, particularly the U.S. Chamber of Commerce, which is reportedly lobbying the Trump administration in an “all hands on deck effort,” to keep the agreement alive.
[Stratfor] [Washington Examiner] [Reuters] [Politico] [Photo courtesy CNBC]