This difference in views echoes the disagreement between the two sides during South Korean President Moon Jae In’s visit to Washington in June, when Trump said the United States and South Korea were negotiating a new trade agreement but Seoul remained conspicuously silent about such an arrangement.
Trump added later that he would discuss the possible withdrawal with his advisers next week, Reuters quoted him as telling reporters during a trip to hurricane-hit Houston.
In an April interview with the Washington Post, Trump called the U.S.’s trade agreement with South Korea “a awful deal” that has left America “destroyed”.
The largest USA business lobby urged member companies to have senior executives call the White House and other administration officials to tell them not to proceed, and to enlist Republican governors in the effort. In April, there were leaks that the United States was about to pull out of the North American Free Trade Agreement (NAFTA), forcing Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau to hurriedly phone Washington to object. These deeply interwoven supply chains are hard to unravel, and the outright breakdown of NAFTA would cause immediate economic pain to a considerable portion of the USA electorate – and key Republican Party constituencies.
Pulling out of KORUS would mark the latest step taken by Trump to abandon the type of worldwide trade agreement that had exemplified world economics for decades. “President Trump is committed to substantial improvements in the Korean agreement that address the trade imbalance”, added Mr. Lighthizer, who participated via videoconference.
The U.S. Chamber of Commerce said in an email to members that it and other business groups “have received multiple reports” that the Trump administration is prepared to notify South Korea of its intent to withdraw from KORUS on Tuesday, and possibly sooner. It noted that the bilateral auto deficit made up about 90% of that deficit.
“With the Korean deal, we terminate and it’s over”, Trump told the Washington Post in that interview. At the August meeting, the South Korean government proposed a joint study to examine the causes of the imbalance.
In July, U.S. Trade Representative Robert Lighthizer said that since 2012, the trade deficit in goods with South Korea has doubled from $13.2 billion to $27.6 billion, while exports of U.S. goods to South Korea have gone down.
A Korus pullout announcement would also likely aggravate Mr. Trump’s already tense ties with Capitol Hill. Lawmakers have repeatedly complained in recent months about what they consider insufficient consultation with the administration over trade policy. The Commerce Department has been investigating whether imported steel threatens USA security under Section 232 of the Trade Expansion Act.
The administration’s debate over a possible Korus pullout comes amid a wide-ranging exploration of changing American trade policy. South Korea has been accused of dumping and subsidizing steel products.