No Result from Special Session
The US Trade Representative (USTR) who visited Seoul to begin a negotiation to revise the Korea-US Free Trade Agreement (FTA) returned empty-handed. The US aimed to prune trade deficits by hastily revising the FTA in the automobile and steel sectors among others. However, finally the US side did not achieve any tangible results as Korean trade minister Kim Hyun-jong made an aggressive move, saying that Korea will not have a negotiation with the US over the revision of the FTA without a joint investigation and research.”
"The two sides have not hammered out any deal at the special session of the Korea-US FTA Joint Committee," Kim said in a press conference at the annexed building of the Government Complex in Seoul on August 22.
The US side strongly demanded an amendment to the Korea-US FTA in the special session. First, the United States claimed that the trade between Korea and the US is unbalanced in the fields of automobiles, steel, and IT. In addition, pointing out that it was necessary to faithfully implement the agreement in order to solve the problem of automobile and origin verification, the US demanded that both sides revise the agreement to solve the US’s trade deficit problem caused by these factors.
"We actively explained that the US trade deficit with Korea was not caused by the FTA with objective statistics and logic,” Kim said. “WE also suggested that experts of both countries investigate, analyze and evaluate the effects of the Korea-US FTA and the cause of the US’s trade deficits with Korea."
"The joint investigation is a consensus," Kim continued. "Without this consensus, we cannot negotiate the revision."
The Korean government has suggested that the joint investigation and research on the effects of the FTA should be preceded in response to the US demand for revision negotiations. In the United States, US experts evaluate that the Korea-US FTA has produced well-balanced results. Last year, the US International Trade Commission (ITC) announced that if it had not been for the Korea-US FTA, the US’s commodity trade deficits would have risen from US$28.3 billion to US$44 billion by 2015.
The US’s claim about its commodity trade deficits is an optical illusion. About 80% of Korea's exports to the US which have increased since the conclusion of the Korea-US Free Trade Agreement (FTA) were cars. But most of them were GM Korea’s exports to North America. In other words, the US’s deficits were not large excluding exports to the US by US companies which entered Korea,
In addition, the United States suffered losses in the trade of goods but gained tremendous benefits in the service trade sector. According to the US Department of Commerce's Bureau of Economic Analysis, the US’s service trade surplus with Korea in 2016 was US$10.7 billion, an increase of 53.8%. In the same period, the US’s deficits in commodity trade grew 127%. After the Korea-US FTA came into effect, Korea's market share in the US import market rose from 2.6% to 3.2%, while the US’s market share in the Korean import market jumped by 2.1%p to 10.6% from 8.5%.
In the meantime, the meeting began with a video conference between Korean trade minister Kim and USTR Robert Lighthizer. Afterwards, Yoo Myung-hee, an FTA negotiator of the Korean Trade Ministry, and Jamieson Greer, chief of staff to the USTR led the meeting for eight hours as replacement chief representatives. The special session was wrapped up on the day. "We will wait for an answer from the US side," Kim said.