Korea-US FTA
Korea's trade negotiator Kim Hyun-jong is discussing pending FTA issues in the second special session of the Korea-US Joint FTA Committee with the participation of officials from both sides including US Trade Representative Robert Lighthizer in the USTR Office in Washington D.C. in the morning of October 4 (local time).
Steps will be taken for the revision of the FTA as Korean and US trade officials agreed to begin negotiations on an FTA amendment in Washington DC on October 4 (local time),,
“We will sincerely take steps required for the start of revision negotiations in accordance with procedures in the Act on Conclusion Procedures on and Implementation of Trade Agreements," said the Korean Ministry of Trade, Industry and Energy in a press release distributed after the second Joint Korea-US Free Trade Agreement Committee meeting.
This means that Korea made a concession from its previous position of insisting on analyzing the effects of the Korea-US FTA prior to revision negotiations. It seems that the reason why the government decided to start the revision negotiation process is that it was difficult for Korea to turn down revision demand from the United States.
Earlier, Korea and the US confirmed their disagreement, suggesting analyzing the economic effects of the agreement in response to the US’s demand to address its deficit in trade with Korea in the first joint committee meeting on August 22. But about ten days later, a US media report said that US President Trump ordered his staff to prepare the dismantlement of the Korea-US FTA. But as only one day after the report, North Korea conducted its sixth nuclear test, ratcheting up tensions on the Korean peninsula, FTA abolishment issues subsided.
Although the security situation on the Korean Peninsula temporarily prevented Trump's threat to scrap the Korea-US FTA, it was difficult for the Korean government to continue to use the proposal to analyze the economic effects as a means of defense.
This is because if conflicts caused by the Korea-US FTA weaken Korea-US cooperation, it will be not good for the Korean government, either. It seems that the Korean side judged that if revision negotiations cannot be avoided, Korea will have to act aggressively and improve matters disadvantages to Korea this time.
For this reason, the government turned more aggressive in recent negotiations with the United States. For example, Korean trade minister Kim Hyun-jong proposed a second round of talks at trade ministerial talks with US Trade Representative Robert Lieberger.
"I cannot talk about it now. I will disclose it at an appropriate time," Kim said when asked about whether the US requested a revision of the Korea-US FTA or not.
The Korea-US FTA will be the fourth FTA to be revised among Korea's 15 FTAs (excluding FTAs with five Central American countries that have not come into force) that have been concluded with 52 countries. The government is currently negotiating an amendment to the FTAs with the ASEAN, India and Chile. Such negotiations are expected to be revised to improve reciprocity, and the government is actively going ahead with improvements.
Korea will hold a public hearing after reviewing economic feasibility if both sides agree on an amendment to the trade amendment as mentioned by the Ministry of Trade, Industry and Energy. Then, Korea will draw up a plan on the conclusion of a trade agreement and report it to the National Assembly after passing it in a meeting of ministers of diplomatic and economic ministers. Finally, the Korean government will declare the start of revision negotiations.
In the case of the US government, if only part of the agreement is amended, steps should be taken through consultations with Congress. According to the Korea International Trade Association, the President is entitled to revise the agreement under the Korea-US FTA Implementation Act but in this case, Congress has the right to negotiate and conclude trade agreements in principle.
The process will become more complicated for a full amendment. The US government should notify Congress of its intention to begin negotiations 90 days before the start of the negotiations. The plan should be announced via federal government newsletters and pass public hearings among others and negotiating goals must be made public 30 days before the negotiation begins.
After this process, the two sides officially declare the start of revision negotiations. Since both countries have to take various steps, it is forecast that official revision negotiations will be launched at the beginning of next year. Once Korea and the United States agree on an amendment, the two sides will take domestic procedures again. The revised agreement will come into effect on a date on which both sides agree.
"When revising the whole agreement, both countries have to go through tough procedures including ratification by the National Assembly (Korea) and approval by Congress (United States) so partial revision procedures will implemented to revise some necessary parts,” said an official of the Korea International Trade Association.
If amendment negotiations are not smoothly carried out so the agreement needs invalidating, one side can scrap the agreement with written notification. In this case, the agreement automatically terminates after 180 days from the date of notification in writing regardless of the other’s intentions. At the conclusion of the agreement, preferential tariffs between the two countries will immediately vanish.