Proactive steps needed to avoid trade pressure
Korea and the United States have concluded the renegotiation of their six-year-old free trade agreement (FTA) far swifter than expected.
In amending the KORUS FTA, Seoul has agreed to open its auto market wider but managed to keep the agricultural market from opening further. The Korean side has staunchly maintained its position that the farm market was a "red line" it couldn't cross.
On the other hand, the U.S. exempted Korea from the 25 percent tariffs on steel exports to America, but decided to slash the purchase of Korean products by 30 percent by setting a stricter import quota.
Korean negotiators appear relieved _ not without reasons. "The agreement on the U.S. steel duty exemption and the KORUS FTA renegotiation removed uneasiness amid rising uncertainties in the global market due to the U.S. trade actions against China," Trade Minister Kim Hyun-chong said in a briefing in Seoul, Monday.
Kim and his bargaining team deserve some compliments for "putting up a good defense" in the face of Washington's intensifying trade pressure. All the more so, given the Donald Trump administration's full-court offensive to slash U.S. trade deficits.
Still, it is doubtful whether Seoul succeeded in ensuring what it had called a "balance of interests." In return for protecting the politically sensitive but economically less significant farming market, Korea seems to have conceded too much in automobiles and pharmaceuticals.
Worse yet, the U.S. is likely to apply pressure on Korea again whenever it thinks it necessary to rectify its trade shortfalls. "Risks always exist in trade," Kim said. "They will persist while President Trump is in the White House." We can hardly agree more.
What should Korea do now? We don't have many options. The model answers have always been there: Diversify export destinations away from the U.S. and China; and reduce the national economy's dependence on foreign shipments, while focusing more on boosting domestic demand.
Other options are to sharpen the competitiveness of Korean industry, especially in services, and set up a ministerial-level trade-negotiating agency with far stronger authority and greater expertise.
All these measures have proved to be far easier said than done. One of the new ways to deal with the unilateral U.S. trade pressure may be switching from defense to offense. For example, the Seoul government can join forces with similar "victims" of the U.S. trade offensive and fight together against Washington by sticking to international rules and norms. Active participation in multilateral free trade talks could be another way.
Enjoying a trade surplus with the U.S. should be no reason to suffer unilateral attacks as long as Seoul plays by global standards.
Korea and the United States have concluded the renegotiation of their six-year-old free trade agreement (FTA) far swifter than expected.
In amending the KORUS FTA, Seoul has agreed to open its auto market wider but managed to keep the agricultural market from opening further. The Korean side has staunchly maintained its position that the farm market was a "red line" it couldn't cross.
On the other hand, the U.S. exempted Korea from the 25 percent tariffs on steel exports to America, but decided to slash the purchase of Korean products by 30 percent by setting a stricter import quota.
Korean negotiators appear relieved _ not without reasons. "The agreement on the U.S. steel duty exemption and the KORUS FTA renegotiation removed uneasiness amid rising uncertainties in the global market due to the U.S. trade actions against China," Trade Minister Kim Hyun-chong said in a briefing in Seoul, Monday.
Kim and his bargaining team deserve some compliments for "putting up a good defense" in the face of Washington's intensifying trade pressure. All the more so, given the Donald Trump administration's full-court offensive to slash U.S. trade deficits.
Still, it is doubtful whether Seoul succeeded in ensuring what it had called a "balance of interests." In return for protecting the politically sensitive but economically less significant farming market, Korea seems to have conceded too much in automobiles and pharmaceuticals.
Worse yet, the U.S. is likely to apply pressure on Korea again whenever it thinks it necessary to rectify its trade shortfalls. "Risks always exist in trade," Kim said. "They will persist while President Trump is in the White House." We can hardly agree more.
What should Korea do now? We don't have many options. The model answers have always been there: Diversify export destinations away from the U.S. and China; and reduce the national economy's dependence on foreign shipments, while focusing more on boosting domestic demand.
Other options are to sharpen the competitiveness of Korean industry, especially in services, and set up a ministerial-level trade-negotiating agency with far stronger authority and greater expertise.
All these measures have proved to be far easier said than done. One of the new ways to deal with the unilateral U.S. trade pressure may be switching from defense to offense. For example, the Seoul government can join forces with similar "victims" of the U.S. trade offensive and fight together against Washington by sticking to international rules and norms. Active participation in multilateral free trade talks could be another way.
Enjoying a trade surplus with the U.S. should be no reason to suffer unilateral attacks as long as Seoul plays by global standards.
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