U.S. Vice President Mike Pence told business leaders in Seoul on Tuesday that the Trump administration will review and reform the five-year-old free trade agreement between the two countries. Bloomberg reports that Pence told business leaders more directly that KORUS, as the trade deal is.
The Trump administration plans to "reform" the existing deal to level the playing field, he told the room of executives, most of whom represented US companies doing business in South Korea. But he has a much tougher message on trade.
His remarks are in line with things President Donald Trump said before taking office.
During his election campaign, Donald Trump called the trade pact with Seoul, which came into effect five years ago, a destroyer of US auto industry jobs.
South Korea moved to downplay Pence's remarks, with a government official in charge of trade matters noting the comments were directed at an audience of US business executives. In 2016, US goods exports to Korea, its sixth largest trading partner, totaled $42.3 billion, which was down 2.8 percent compared to the previous year.
He said with the aim to "move toward a system that maximizes jobs and growth and brighter future" for the people of both countries, "We will work with you toward that end as we reform KORUS in the days ahead".
South Korea argues that automobiles are a small fraction of total exports to America. "Under President Donald Trump, over-regulations' days are over and there's a new era of jobs, growth and prosperity in the United States of America", he said.
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Pence's comments have again raised alarm bells in Seoul. The bilateral trade deal was negotiated during George W. Bush's administration. The report accused the FTA of causing a "dramatic increase" in the country's trade deficit.
As part of its efforts to avoid the manipulator label and a major renegotiation of its trade deal, South Korea has announced plans to import more energy products from the USA, while encouraging its companies to invest more in America.
Seoul's trade surplus with the United States a year ago was $23.3 billion, up from an $11.6 billion surplus in 2011, according to the Korean Ministry of Trade, Industry and Energy, but lower than the $33.8 billion in 2015. In 2016, the surplus measured at $23.2 billion, according to official data.
In that vein, the FTA has equally benefited the allies rather than just one side, experts say.
"Despite the strong ties between the USA and Korea, we have to be honest about where our trade relationship is falling short", he said in a speech to the American Chamber of Commerce at the Grand Hyatt Hotel in Seoul.
Experts, however, still cautioned that his latest remarks should be seen as providing an overall direction in Washington's trade policy for South Korea who is to choose its next president in the election scheduled for May 9.
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