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Korea-US Free Trade Deal Led To Ballooning Trade Deficit: USTR

By March 2, 2017 at 7:22 am
US exports to South Korea fell to $1.2 billion, while imports of South Korean goods surged by over $13 billion after the trade deal went into effect in 2012. (Photo : Getty Images)

The United States needs to review its approach with trade deals pointing to how its free trade agreement with South Korea led to the significant increase in its trade deficit, according to the US Trade Representative Wednesday.

The total value of US goods exported to South Korea dropped by US$1.2 billion, while American imports of South Korean goods surged by over $13 billion after the trade deal went into effect, according to the USTR.

The report offers strong evidence that the US could consider a renegotiation of the free trade agreement. New US President Donald Trump has already withdrawn from the 12-nation Trans-Pacific Partnership and chided South Korea's neighbors China and Japan for their trade policies.

Trump, during the presidential campaign, repeatedly called Washington's deal with Seoul came at the expense of US auto industry jobs. Since assuming office, he hasn't said plans to completely abolish the deal. 

The two countries can agree in writing to amend the KORUS deal, the biggest in the US since signing the North American Free Trade Agreement (NAFTA), while it would require a six-month notice period to terminate it.

South Korea's Ministry of Trade, Industry, and Energy said representatives of two countries have held discussions on trade issues under the frame of the bilateral trade deal. During their joint committee in January, the renegotiation issues were not brought up.

The American Chamber of Commerce in Korea (AMCHAM Korea) said it wants to keep the current FTA. The agreement, which took effect in 2012, got rid 95 percent of tariffs on industrial and consumer products over five years.

AMCHAM Korea Chairman James Kim said South Korea should look at ending some import regulations that hurt trade. Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce, also defended the US-South Korean pact.

Last year, the US International Trade Commission said the deal has been good for US interests, saying the FTA has improved bilateral merchandise trade balances by about $15.8 billion in 2015. 

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