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Analysts expect 'full-scale resetting of KORUS FTA'

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  • Published Jul 19, 2017 6:09 pm KST
  • Updated Jul 19, 2017 6:09 pm KST

By Kim Jae-kyoung

SINGAPORE ― It seems President Moon Jae-in and his policymakers are painting a rosy picture of Korea’s relationship with the United States following the summit between Moon and U.S. President Donald Trump.

However, a series of incidents showing gaps between the two administrations over substantive issues is casting doubt on such optimism. The Moon administration’s clumsy approach has exposed its lack of sophistication in diplomacy.

This is because they did not try to catch the true message Trump’s rhetoric carries. They have focused only on positive remarks by Trump who usually says good things with no details when meeting with his counterparts.

This is well manifested in the divergent views about the free trade agreement between the two administrations.

Trump officially called the Korea-U.S. Free Trade Agreement (KORUS FTA) into question during the summit in late June. But the Moon administration underestimated his remarks, claiming there was no official discussion about the trade deal.

A week ago, the U.S. notified South Korea it wanted to start the process of revising the agreement. It called for convening a meeting in Washington in August.

The Korean government said the U.S. was seeking modest amendments to the agreement, while Trump made it clear the U.S. was renegotiating the KORUS FTA, calling it a "horrible" deal.

Seoul’s blind optimism based on empty rhetoric by Trump and an arbitrary interpretation of U.S. demands has raised concerns about the future course of renegotiations and other contentious issues.

Although the Moon administration argues there will be only minor modifications, many analysts think the other way around.

“I think the U.S. wants a full scale resetting of the free trade deal. I don’t think they will be content with minor tweaks and modifications,” Rob Carnell, the Singapore-based chief economist at ING Asia-Pacific, told The Korea Times.

“Having failed to make progress on any of their other policy goals, such as health care, fiscal policy and only limited progress on immigration, trade is one area where they can score some policy wins.”

Taking these into consideration, there are two simple things that Moon should keep in mind when interpreting Trump’s words.

First, Trump always talks about the positive side of issues. Second, he has no details in his words.

Trump gimmick

Given his businessman-style speech, it could be a mistake to take Trump’s positive statements seriously. He engaged in his usual rhetoric at that time, according to analysts.

“His words tend to be very generic and always try to find the positive side of the issues,” said Antonio Fatas, professor of economics at INSEAD’s Asia campus in Singapore.

Trump always stresses “great relationship” when he meets with his counterparts even if there is a contentious issue. Trump’s recent remark about Chinese President Xi Jinping is a case in point.

"We have a great relationship with China and I really like President Xi," Trump said in a speech during a political rally June 21. His comments came a day after he tweeted that Beijing's efforts to contain Pyongyang have “not worked out.”

Most governments now are playing the same game with the Trump administration. They try to be nice and complimentary about Trump’s policies while waiting for the U.S. to make a move and ask for something specific.

The Korean government should try to figure out what the Trump administration is really about and focus on details when preparing for negotiations.

“They (Trump’s words) lack details. They show his ignorance of the most basic economic concepts,” Fatas said. “The Trump administration lacks the experts and expertise to move forward with the details.”

Carnell suggested Seoul closely watch the NAFTA renegotiations because it can be a benchmark for the KORUS FTA talks.

“If aggressive, then we should expect similar treatment for South Korea, though there is also a political element here which is absent with NAFTA: North Korea,” he said. “So timing-wise, this makes it a little awkward for Trump to play hard ball.”

Once the Korean government comes up with a detailed plan with scenario-based strategies, chances are South Korea will reap the desired results from its diplomacy with the U.S., including the KORUS FTA renegotiations.