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Abu Dhabi, UAETuesday 11 December 2018

US seeks to renegotiate South Korea free trade deal

US president Donald Trump railed against trade agreements on the campaign trail, blaming them for the loss of American jobs as he courted support from working class voters

US president Donald Trump (L) and president of South Korea Moon Jae-in (R) walk down the Colonnade after delivering joint statements in the Rose Garden of the White House in Washington, DC, on June 30. EPA / Michael Reynolds
US president Donald Trump (L) and president of South Korea Moon Jae-in (R) walk down the Colonnade after delivering joint statements in the Rose Garden of the White House in Washington, DC, on June 30. EPA / Michael Reynolds

The US formally declared on Thursday it wants to renegotiate its free trade agreement with South Korea, as the world's biggest economy seeks to redraw the global commerce system in its favour under President Donald Trump.

Mr Trump railed against trade agreements on the campaign trail, blaming them for the loss of American jobs as he courted support from working class voters, while supporters say that removing barriers to business increases prosperity overall.

He has already pulled the US out of the Trans-Pacific Partnership (TPP), a proposal led by the Obama administration to create the world's biggest trade pact, which was signed in February last year but never went into force.

And talks are due to start next month on renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, after Mr Trump backed down from a threat to withdraw unilaterally from the pact, which has boosted industry and created tight manufacturing, agriculture and business links throughout the region.

The US free trade agreement with South Korea, known as KORUS, went into force in March 2012, since when Washington says its trade deficit with the country has more than doubled, from $13.2 billion in 2011 to $27.6 billion last year.

Seoul puts the 2016 figure at $23.2 billion.

In a statement, US Trade Representative Robert Lighthizer said he had called a joint committee meeting under KORUS "to start the process of negotiating to remove barriers to US trade and consider needed amendments to the agreement".

Mr Trump has described KORUS as a "horrible" deal for the US, and in a letter to South Korea's trade minister, Lighthizer said there were "problems regarding market access in Korea for US exports" and Washington wanted to see a "more balanced trade relationship".

The joint committee should meet next month in Washington, he added.

Seoul reacted sceptically, with the ministry of trade, industry and energy saying in a statement that the deal could only be changed by mutual agreement.

"Under the FTA, it is not necessarily obligatory for our side to comply with the US proposal for amending the FTA," it said in a statement.

"First of all," it added, officials should "study, analyse and assess the effect of the KORUS FTA and determine whether the FTA should be blamed for the trade imbalance".