Seoul and Washington began their first negotiations, Friday, on amending the free trade agreement they signed five years ago, known as KORUS.
Unlike the NAFTA re-negotiations, the trade talks between Seoul and Washington are designed to amend the agreement, rather than start from scratch.
“The automotive sector will be front and center in this negotiation,” said Wendy Cutler, Asia Society Policy Institute Vice President and Managing Director, who helped negotiate the original free trade agreement.
Cutler says Seoul’s tariffs on U.S. trucks are of particular concern to U.S. automakers who say the tariffs are discriminatory.
“It would be natural to ask for a delay in the tariff staging on [S. Korea’s] 25% tariff on truck imports,” said Cutler, adding that they being to reduce after year eight of the agreement. The agreement is now in its sixth year.
There are also U.S. concerns that the R.O.K. hasn’t fully implemented parts of the agreement.
In a statement released after the completion of Friday’s talks, U.S. Trade Representative
Robert Lighthizer said, “We have much work to do to reach an agreement that serves the economic interests of the American people. Our goals are clear: we must achieve fair and reciprocal trade between our two nations. We will move forward as expeditiously as possible to achieve this goal.”
For its part, Seoul says the free trade agreement benefits both countries by expanding trade and improving market access.
A study the country commissioned last year shows any amendments to the existing agreement are unlikely to have a significant impact, because in many trade sectors most of the tariffs have already been scrapped.
Korean negotiator, Yoo Myung-hee arrived in the U.S. on Thursday. According to Yonhap news service, she told reporters: “I will put the national interest first and conduct negotiations in a manner that strikes a balance of interests and reflects our national interest….Whatever issues come up, we will reciprocate U.S. demands with our own.”
According to a statement released after the talks by the R.O.K.’s Ministry of Trade, Industry and Energy, “The two countries’ delegations discussed their priority areas of interest and agreed to set the schedule for the next meeting in the near term.”
TRADE FRICTIONS IN SEOUL
On his recent trip to Asia, President Trump said he “could no longer tolerate chronic trade abuses and would insist on fair and equal trade policies.”
Nonetheless, after Seoul announced the purchase of $58 billion dollars in U.S. goods and services, Trump appeared more hopeful that the U.S. trade deficit will be closed.
“I feel confident that we’ll be able to reach a free, fair, and reciprocal trade deal as we renegotiate our current five-year-old trade document,” said Trump during a joint press conference with R.O.K. President Moon Jae-in in Seoul.
“In order to enjoy the benefit of free, equitable, and balanced trade together, we agreed to have the relevant authorities expedite the process of KORUS FTA consultation,” added Moon. “By sharing the universal value and the fruits of economic prosperity with the humankind, President Trump and I agreed to make a joint contribution to the peace and prosperity of the world.”
Last September, U.S. news outlets reported that Trump was threatening to pull out of the agreement. Many lawmakers are pushing the U.S. to stay in—especially those who represent beef and dairy farmers. They benefit from the agreement.