Trump’s South Korea Trade Deal Falls Short Of His Promises
September 24, 2018
Trump previously promised to terminate the South Korea trade deal if South Korea failed to make major concessions. But major concessions did not happen. Instead, the trade agreement Trump reached with South Korea fell short of his demands, includes only “modest” concessions from South Korea and leaves many major trade issues unaddressed.
South Korea’s concessions to the U.S. were “modest” and did not address several major trade issues.
Los Angeles Times: “The new amendments to the trade deal will mark modest concessions by a trading partner that is a relatively small player behind the European Union, China and Canada. The amendments do not directly address some major trade issues between the two countries, including agriculture.”
CNN Money: “Some economists have suggested the new deal isn’t significantly different from the old one.”
Bloomberg: “The changes negotiated by the Trump administration were mostly cosmetic, said Wendy Cutler, who served as chief U.S. negotiator of the original deal with South Korea. ‘It just underscores how modest the improvements are,’ Cutler said by phone.”
Experts said South Korea emerged from the talks “unscathed and the deal was “almost too good to be true” for the country.
Asia Economist Krystal Tan: “Despite Trump’s threats, South Korea appears to have emerged from the talks ‘unscathed,’ said Krystal Tan, an Asia economist at research firm Capital Economics. ‘The concessions that Korea has agreed to will have a very small impact on its economy,’ she wrote in a note to clients.”
Seoul National University Professor Ahn Duk-geun: “The deal has many in South Korea breathing a sigh of relief. The concessions made by Seoul were ‘modest,’ said Ahn Duk-geun, a Seoul National University professor of international studies and an international trade expert. ‘It’s almost too good to be true.”
Wall Street Journal: “The deal has many in South Korea breathing a sigh of relief.”
South Korea’s primary concessions on U.S. auto imports and Korean truck exports won’t have any substantive effect.
Forbes: “The Korean deal, struck in the spring of this year, is really a minor reworking of the original Korea-U.S. Free Trade Agreement (KORUS). The new pact did remarkably little. It turned U.S. steel tariffs into a ‘voluntary export restraint’ quota by the Koreans, thereby ensuring that the United States would not get tariff revenue while it endured higher domestic steel prices. It made the Koreans promise not to ship pickup trucks to the United States for years to come (they were not currently shipping any). And it expanded the limit for the number of U.S. cars to enter Korea that did not precisely meet Korean standards (no auto manufacturer was even at the old limit).”
The Trump administration failed to secure concessions on agriculture market access in trade negotiations with South Korea.
Yonhap News Agency: “While Washington called for further opening of the agriculture and livestock market, Seoul refused to make changes to the sector that has suffered massive damage due to cheaper U.S. food products since implementation of the trade pact.”
The South Korea trade deal falls short of Trump’s promises:
Trump promised to reduce the trade deficit with South Korea, but the agreement is unlikely to have a tangible impact on the trade balance with cars, which accounts for most of the U.S. trade deficit.
Trump: “The Trump administration initiated talks to renegotiate the United States-Korea (Korus) trade agreement in July last year, arguing it was lopsided because American’s bilateral trade deficit had ballooned under it. ‘We have a very, very bad trade deal with Korea,’ Trump said. ‘For us it produced nothing but losses.’”
Bloomberg: “Seoul has agreed to double to 50,000 the number of cars each U.S. automaker can sell in the Asian nation without meeting local safety standards, said the officials, who briefed reporters on condition of anonymity. However, it’s not clear how the higher cap will immediately benefit American manufacturers, given that sales by American automakers currently fall well short of the new limit.”
Washington Post: “South Korea enjoyed an $18 billion trade surplus with the United States last year, although that was down from $23 billion in 2016, according to South Korean government figures. Cars account for more than 70 percent of the surplus.”
Trump promised to stop countries from manipulating currency, but the currency agreement with South Korea was “mainly symbolic” and “not enforceable.”
Trump: “Any country that devalues their currency in order to take unfair advantage of the United States and all of its companies who can’t compete will face tariffs and taxes to stop the cheating. When they see that, they will stop the cheating.”
CNN Money: “But the devil is in the detail. The currency provision is not actually in the official agreement and has no enforcement mechanism. Including it in the text of the deal would have required a lengthy legislative approval process, a path that administration officials indicated they did not want to go down.”
Trump promised to tax South Korean television imports and stop their “dumping”, but the trade deal revisions did nothing to address it .
Trump: “But with cars, with television sets, with things like that, where they’re dumping them on us — we don’t make television sets anymore in this country. They come from South Korea, and they come from, to a lesser extent, Japan. Most of them come from South Korea. It’s not fair. And I believe that we should have reciprocal taxes on that, likewise.”
CNN Money: “South Korean exporters will be relieved that none of the tariffs that were lifted under the original agreement have been brought back, according to Krystal Tan, an economist at research firm Capital Economics.”