WASHINGTON, April 5, 2017 - The Trump administration has made clear its dislike of the five-year-old U.S.-Korea free trade agreement (KORUS FTA), but South Korea’s ambassador is making an impassioned defense for the pact that the U.S. beef industry also loves.
“The KORUS FTA has been enforced for the past five years and … it is working fine,” Ambassador Ahn Ho-Young told Agri-Pulse in a recent interview after delivering a speech to the National Cattlemen’s Beef Association (NCBA) in Washington.
While that may be South Korea’s view – the country had a $28 billion trade surplus for goods with the U.S. last year – the Trump administration thinks otherwise.
Buried in the 2017 Trade Policy Agenda released last month by the White House was the complaint that KORUS FTA “has coincided with a dramatic increase in our trade deficit with that country.
“From 2011 … to 2016,” the agenda said, “the total value of U.S. goods exported to South Korea fell by $1.2 billion. Meanwhile, U.S. imports of goods from South Korea grew by more than $13 billion. As a result, our trade deficit in goods with South Korea more than doubled. Needless to say, this is not the outcome the American people expected from that agreement.”
Ahn painted a different picture when he spoke to a room full of cattle ranchers. It was a receptive audience because, unlike many other goods, beef exports to South Korea are booming.
The U.S. shipped about $1.1 billion worth of beef to South Korea in 2016, up from just $582 million four years earlier. Much of that increase is attributed to the trade pact, which slashed imports on U.S. beef.
“Do you love beef?” Ahn shouted to the NCBA audience. The packed room yelled back a resounding “Yes!”
“I love beef as well,” Ahn responded. “Especially beef coming from the United States.”
But U.S. trade with South Korea goes far beyond just beef. The Asian country continues to increase exports of cars, smartphones, semiconductors and other products to the U.S., pushing up South Korea’s trade surplus.
That is subject to change, though, Ahn stressed. For example, South Korea is beginning to import liquefied natural gas from the U.S. and that will cut down on the U.S. trade deficit. South Korea is scheduled to buy $2 billion of the fuel this year and then accelerate purchases, the ambassador said.
Ahn admitted that there is some uncertainty surrounding trade with the U.S., but also stressed that the two countries’ trade and investment relationship continues to evolve and improve. Hankook, a tire manufacturer, and LG Electronics, two South Korean companies, are building new factories in Tennessee, Ahn said.
The Trump administration has already pulled the U.S. out of the Trans-Pacific Partnership (TPP) and started the process of renegotiating the North American Free Trade Agreement (NAFTA) with Mexico and Canada.
Kevin Kester, NCBA’s president-elect, told Agri-Pulse that there is some concern about the White House trade agenda, but stressed that he’s confident that cattle ranchers won’t be hurt and that beef exports will thrive.
“Of course, we don’t want to be collateral damage or see any unintended consequences from the administration as they look into different trade negotiations,” he said. “We have hard assurances from many within the administration that they will look after us.”
Ahn said he has gotten no word from the Trump administration yet about a desire to renegotiate the trade agreement, but he stressed that South Korea is willing to be flexible in its trading relationship with the U.S.
“The review of KORUS FTA is an ongoing process,” the ambassador said. “It is not something which is just written in cement and stuck. It is something which is evolving all the time.”