PRESIDENT TRUMP TAKES KORUS FTA EXIT OFF THE TABLE

Tricia Braid

Sep, 06, 2017  |  Today's News |  Exports |  Legislation & Regulation

Sources are now reporting that President Trump is no longer considering exiting the U.S.-Korea Free Trade Agreement (KORUS), citing national security concerns. We know that many calls and emails went into Congressional offices over the Labor Day holiday weekend and through yesterday on this issue. The White House has indicated that in the future, President Trump may consider exiting the agreement again, so please keep those bits of information about the importance of the Korean market to IL Corn farmers at hand. For a full story on this change of heart, read the full story from Inside U.S. Trade.

Sources: White House has assured lawmakers that KORUS withdrawal is off the table 

The White House has assured key lawmakers that its threat to begin withdrawing from the U.S.-Korea Free Trade Agreement has -- for now -- been taken off the table, sources told Inside U.S. Trade.

According to these sources, the plan to terminate the agreement had been discussed with several Capitol Hill offices including that of House Speaker Paul Ryan (R-WI), who was one of the lawmakers informed that the administration had decided not to withdraw.

But the business community has been asked by some inside the White House to keep up the pressure against withdrawal because, as one source put it, “POTUS is so unpredictable.”

U.S. Trade Representative Robert Lighthizer told reporters on the sidelines of the second NAFTA round in Mexico City on Tuesday that he was looking for amendments to KORUS and was hopeful it could be modified to address issues the U.S. has complained about since the deal entered into force.

Asked whether he would support a withdrawal, Lighthizer said “We have a negotiation where we would like some amendments to the Korean agreement,” but declined to offer any details.

“My hope is we have a successful discussion with the Koreans as things proceed and that the problems with that agreement from all perspectives will be worked out,” he said.

Some sources told Inside U.S. Trade late last week that the Office of the U.S. Trade Representative was emphasizing to congressional staff and the business community that the withdrawal idea came from inside the White House -- and not from USTR -- but others said the White House was telling stakeholders to weigh in with USTR, suggesting the move was supported not only by Trump but also by Lighthizer.

Since Inside U.S. Trade reported on Sept. 1 that the Trump administration was seriously considering the move, the business community, lawmakers and national security officials have mobilized to counter a withdrawal and to make the deal’s geostrategic and economic case to the president.

Sources inside and outside the administration say withdrawal became less likely once the possibility leaked -- and that there were forces within the White House pushing for the idea to become public in an attempt to counter the president’s proposal.

One source, noting both the KORUS move and the president's repeated NAFTA withdrawal threats, said Trump’s comments were becoming “less and less convincing as a threat and more and more annoying to our trade partners.”

South Korea's Minister of Trade, Industry and Energy Paik Ungyu this week told reporters that Seoul would have to consider “various possibilities” for how to proceed with the deal, according to a Sept. 5 Yonhap news service report.

“Although we cannot show all of our cards while talks are underway, we will calmly and fairly respond,”  Paik said, according to Yonhap. “We have to research, analyze and evaluate the benefits of the FTA before the two parties renegotiate the trade terms.”

Korea has resisted the U.S. push to renegotiate the deal, insisting instead that the two countries jointly study the trade balance between the two -- and the causes of the U.S. trade deficit the administration has cited as a main reason for its desire to redo KORUS. Korea’s trade minister called the study a “precondition” to proceeding with any potential changes to the agreement. The U.S. has yet to respond to Korea’s entreaty.    

Ambassador Cho Hyun, second vice minister of foreign affairs at the Korean Ministry of Foreign Affairs, said during a Sept. 5 event hosted by the Center for Strategic and International Studies that maintaining KORUS is very important for both sides.

Asked about the Korean perspective on the U.S. consideration of a withdrawal from the deal, he said South Korea’s newly appointed trade minister, Kim Hyun-chong, “has many friends in the beltway” and is confident “he will sort it out.”

The administration’s KORUS idea has been criticized by the leaders of the congressional committees of jurisdiction, who either had not been informed of it at all or were told about it very late in the process, sources said.

In a Sept. 5 statement, the “big four” acknowledged that the bilateral trade relationship with Korea “has presented frustrations for some important U.S. industries and stakeholders,” adding that “we must press South Korea to improve its implementation and compliance.”

But, they added, “To be effective and constructive, however, we must not withdraw from the agreement while we do so.”

The four also mentioned “the importance of transparency and close consultation by the administration with Congress and American businesses and workers.”

The business community has also lived with anxiety since news broke late last week, and stakeholders were working through Labor Day weekend appealing to Congress as well as the administration to abandon the idea of withdrawal.

Among them was the U.S. Chamber of Commerce, whose president and CEO, Thomas Donohue, delivered a strong message of disapproval of the withdrawal threat.

“It’s difficult to imagine a move that would bring more self-harm to our economy and national security, with no benefit in return, than withdrawing from KORUS. We urge the administration not to make this rash and irresponsible move,” Donohue said.

Echoing the congressional response, the Chamber’s senior vice president, John Murphy, said on Twitter that “consultation with the U.S. business and agriculture community on trade policy makes a world of sense.”

“After all,” he added, “governments don’t trade: Businesses do, and their real-world experiences should guide policy. This extends to major decisions such as whether to enter into or withdraw from a trade agreement. However, consulting with businesses, farmers, and ranchers on trade isn’t just a good idea: It’s the law.”