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(Yonhap Interview) S. Korea-U.S. trade deal in 'fragile' state: KEI chief

All Headlines 22:50 November 02, 2017

By Lee Haye-ah and Lee Seung-woo

WASHINGTON, Nov. 2 (Yonhap) -- The free trade agreement between South Korea and the United States is in a perilous state as the allies' leaders prepare to meet in Seoul next week, a former member of Congress and expert on Korean affairs has said.

Since coming into effect in 2012, the bilateral deal known as KORUS has bolstered the alliance forged in blood in the 1950-53 Korean War. But U.S. President Donald Trump won last year's election partly on a promise to revisit the country's trade deals, and the Korean agreement could be one of the first to go, according to Donald Manzullo, president of the Korea Economic Institute of America.

"Here we have a president that ran on the basis of his opposition to free trade agreements," Manzullo said in an interview at his office. "He is in the process of renegotiating both KORUS and NAFTA (North American Free Trade Agreement). Both of these free trade agreements, especially KORUS, are in a fragile condition in this country."

Donald Manzullo, president and CEO of the Korea Economic Institute of America, speaks in an interview with Yonhap News Agency at his office in Washington on Nov. 1, 2017. (Yonhap)

Trump has slammed KORUS as a "horrible" deal that hurts American businesses and workers, citing a growing deficit in goods trade with Asia's fourth largest economy. Under pressure from Washington, Seoul agreed last month to begin domestic procedures for an amendment to the deal.

When Trump meets with South Korean President Moon Jae-in Tuesday, the issue is sure to be raised in the midst of coordination on the nuclear threat posed by North Korea.

"This makes KORUS even more fragile because the president could say to Korea: 'I've got your back on security, but I can't be with you on trade,'" said Manzullo. "That could be a tradeoff to him."

Trump is unlikely to threaten to pull out of the agreement, as he did ahead of North Korea's sixth and most powerful nuclear test in September. But "absent extraordinary effort," Manzullo said, "it's going to be difficult to salvage KORUS."

The former U.S. representative of 20 years based his warning on the "changing mood" among the American public and his own expertise in manufacturing and agriculture.

He also emphasized the political challenges Trump faces as he grapples with his legislative agenda for health care, immigration and tax reform.

"He needs a victory somewhere, and the victory is to satisfy his campaign promise," Manzullo said. "NAFTA's a lot bigger in terms of dollars than KORUS, and KORUS could end up being axed just to save NAFTA."

The expert pinned his hopes on Congress and also on Moon.

"It appears that Congress may be the only source, the only stop, between KORUS staying in effect and being rejected," he said. "It's going to take a lot of work. But that's where President Moon comes in, with his reputation for being a good negotiator, very fair. He could try to take the politics out of this agreement, yet understands the politics that's driving Trump."

South Korea had a surplus of US$23.3 billion in goods trade with the U.S. last year, according to the Korea International Trade Association. The U.S. Census put the figure at $27.7 billion.

In services trade, South Korea posted a deficit of $14.3 billion last year, according to the country's central bank. The U.S. Bureau of Economic Analysis put the number at $10.1 billion.

"It's a win-win situation both for the U.S. and the Republic of Korea," Manzullo said. "Even though we may have a situation where the (U.S.) deficit has grown in goods, it would have grown in larger capacity had the Korea-U.S. free trade agreement not been signed."

During his time in the U.S. House of Representatives from 1993 to 2013, Manzullo led several panels, including the Foreign Affairs Subcommittee on Asia and the Pacific.


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