U.S. and South Korea Explore Ways to Improve Bi-lateral FTA

The United States and South Korea held their first talks on updating their bi-lateral free trade agreement (KORUS) on 5 January in Washington, D.C., and could hold subsequent rounds every three to four weeks, according to press reports. South Korea’s trade ministry said in December 2017 that the domestic procedures necessary to consider amending the KORUS agreement, including consultations with lawmakers and stakeholders, have been completed.

Trump administration officials have said they want to resolve outstanding issues with respect to KORUS implementation and secure revisions that will lead to fair, reciprocal trade. South Korean officials, meanwhile, have said that while the agreement could be strengthened they see no need for substantial revisions because it has generated mutually beneficial outcomes in terms of trade, investment and employment. Following the 5 January meeting, U.S. Trade Representative Robert Lighthizer observed that there is “much work to do to reach an agreement” on updating the FTA “that serves the economic interests of the American people.” According to press reports, South Korean trade minister Kim Hyun-chong agreed, adding that he expects “an uphill battle.” Lighthizer pledged to “move forward as expeditiously as possible” but no further discussions have yet been scheduled.

A USTR press release states that both sides engaged on their priority areas of interest during the day-long session. In particular, the United States discussed proposals to move toward “fair and reciprocal” trade in key industrial goods sectors, such as autos and auto parts, and to resolve additional cross-cutting and sector-specific barriers impacting U.S. exports. Press reports add that South Korea pressed issues including investor-state dispute settlement, protections for its agriculture industry, and U.S. import restrictions such as safeguard measures and antidumping duties.

In contrast to the on-going North American Free Trade Agreement discussions, the United States is pushing for a modification rather than a full re-negotiation of KORUS. This is generally seen as a positive sign by KORUS supporters despite the fact that the discussions are not being conducted under the Trade Promotion Authority umbrella, which requires the administration to consult with Congress and adhere to strict timelines. While the KORUS talks are expected to be much narrower in scope than the NAFTA discussions, South Korean negotiators are nonetheless anticipating a tough negotiation focused in large measure on bi-lateral automotive trade.