Forces Upkeep Spat with U.S. Could Hurt Exports

  • By Ahn Joon-ho, Roh Suk-jo

    January 28, 2019 13:23

    Concerns are rising that a spat between Korea and the U.S. over the upkeep for American troops here could prompt Washington to slap punitive tariffs on Korean exports like cars.

    The notoriously peevish Trump Administration is adamant that the minimum South Korea should pay for the upkeep of the U.S. Forces Korea should be US$1 billion per year or W1.12 trillion. But Seoul wants to pay no more than W1 trillion.

    There are fears that by trying to save W120 billion per year on defense, Korea faces greater losses in exports to the U.S.

    U.S. President Donald Trump could retaliate with higher tariffs on Korean cars if he does not come away with a satisfactory deal.

    Trump has been pushing for a 25-percent tariff on imported cars under the Section 232 of the Trade Expansion Act since last year, overriding the existing free trade agreement on the spurious grounds that imports harm "national security." The deadline for deciding on tariffs, which was temporarily suspended at the end of last year, comes on Feb. 17.

    Although the U.S. government has not officially linked the forces upkeep negotiations to tariffs, Trump's capricious nature has Korean insiders worried. "The U.S. side has not brought up the tariff issue to us yet, but common sense has had little place in the Trump administration so far, so it is possible that the two issues will affect each other," a government official here said.

    The government has belatedly started to appeal to public sentiment on the issue. One retired diplomat said, "Cheong Wa Dae ordered the foreign ministry to stop working-level negotiations at the end of last year and took it over. Now it’s likely to agree to increase South Korea's share at the last minute, perhaps in exchange for easing economic sanctions on North Korea to promote inter-Korean business projects."

    But USFK upkeep negotiations have never gone smoothly. Prof. Park Won-gon at Handong Global University said, "The U.S. will strongly insist on South Korea taking a bigger share of the cost, and Trump may threaten to reduce troop numbers. I would say, rather than agreeing to the one-year deal the U.S. wants, it would be better to work toward a longer deal that is valid for three to five years."

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