Trump hints at pulling out of free trade deal with South Korea

WASHINGTON • US President Donald Trump said he would discuss the future of the United States-South Korea free trade agreement (FTA) with his advisers following a newspaper report that he was considering terminating the pact.

"I am," Mr Trump said in response to a question about whether he was discussing the issue with advisers.

"It's very much on my mind," the President said during a visit to Houston on Saturday to view the damage from Hurricane Harvey.

Mr Trump's administration had begun talks with South Korea to revise a trade deal signed in 2012 by the Obama administration, but they failed to agree on a way forward after joint meetings in August. The dialogue comes amid rising tensions with North Korea over Pyongyang's missile tests.

"Now is not the time for Washington to pull out of the KORUS FTA because a rift between the allies is exactly what Pyongyang wants and it's being served to them on a silver platter," Ms Duyeon Kim, a visiting senior fellow at the Seoul-based Korean Peninsula Future Forum, said yesterday.

The Washington Post reported earlier on Saturday that Mr Trump had ordered his advisers to prepare plans to withdraw from the pact, and that the formal process to leave could start as soon as this week.

No final decision has been made and Mr Trump could remain in the agreement to see if changes are still possible, the newspaper reported, citing several people close to the process, whom it did not identify.

If Mr Trump withdraws from the agreement, he could try to force South Korea to import more US products with little to no import restrictions, something he believes will help US firms and workers. South Korea could also decide to refuse any discussions with Mr Trump, kicking off a trade war between the two countries.

No announcement is expected on the US-South Korea trade deal at this time, an official with the US Trade Representative office said on Saturday.

There is "no change" in South Korea's policies on its FTA with the US, Yonhap cited an official from the Ministry of Trade, Industry and Energy as saying yesterday.

South Korea is "thoroughly preparing for all possibilities and will closely monitor" the US developments over the trade agreement, the ministry official said, according to Yonhap.

Mr Trump's push to revise the deal is part of his broader drive to tackle unfair trading practices and cut the US trade deficit.

He pulled the US out of the Trans-Pacific Partnership agreement during his first week in office and his administration is currently in talks to rewrite the 23-year-old North American FTA. Mr Trump said last month that Canada and Mexico are being "difficult" and he will probably need to scrap the pact.

South Korea is the US' sixth-largest trading partner, while the US is South Korea's second-largest trading partner after China. The US had a US$17.6 billion (S$23.9 billion) trade gap with South Korea last year, compared with US$7.7 billion in 2012.

BLOOMBERG, WASHINGTON POST

A version of this article appeared in the print edition of The Straits Times on September 04, 2017, with the headline 'Trump hints at pulling out of free trade deal with South Korea'. Print Edition | Subscribe