July 14, 2017 12:58
The prospect of renegotiating the Korea-U.S. free trade agreement, which went into effect in 2012, has become a reality after Washington fired off a request in unseemly haste. Talks are expected to start around November.
The letter from the U.S. Trade Representative asks for "amendments and modifications" rather than a complete overhaul. U.S. President Donald Trump has denounced this FTA and the North American Free Trade Agreement as "job killers," but it seems the Trump administration now acknowledges the value of the Korea-U.S. FTA, give or take a few tweaks. Since the trade pact went into effect, Korea's share of the U.S. market has grown 0.62 percentage points but America's share of Korea's market increased 2.14 percentage points.
The U.S. is expected to focus on trade imbalances in the car and steel industries as well as allowing American law firms to operate in Korea and letting foreign investors hold stakes in Korean newspapers and broadcasters. The U.S. is Korea's second-biggest trading partner, accounting for 12 percent of the country's trade, so changes could have a huge economic impact. The Ministry of Trade, Industry and Energy needs to prepare meticulously for the talks.
But there is no reason to be terrified. Many of the so-called trade imbalances the U.S. refers to are either nonexistent or have little to do with the FTA regulations. Trump has cited the auto sector as a major area, but Korea's import of American-made cars grew a whopping 22 percent last year.
Korea's fuel efficiency and emission regulations, too, which the U.S. has slammed as monstrously unfair, are actually less stringent than those imposed by the EU and Japan. These things can be explained and misunderstandings resolved. In turn, Korea needs to raise problems with intellectual property rights and the travel service sector, where its businesses are actually losing money. It also needs to win concessions on the globally controversial issue of Investor-State Dispute Settlement, which allows multinational corporations to sue governments over regulations they consider damaging to their business.
Over the last five years since the bilateral FTA went into effect, both Korea and the U.S. have seen their shares of their respective economies grow. The U.S. must know this. But there is a huge political factor behind the upcoming talks, so Seoul needs to exercise all its wisdom to reach an amicable settlement.
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