Two US reports feared to cloud summit
By Yoon Ja-young
Two U.S. reports on its trade deficit with Korea and steel imports from here due this week are expected to increase tension between President Moon Jae-in and U.S. President Donald Trump during their first summit, June 29.
The first report on the U.S trade deficit with 16 countries was ordered by President Trump, March 31. Considering that the order has to be executed within 90 days, the report is likely to be released anytime this week.
Korea will be included in the report along with China, Germany and Japan among the others. Korea had a $27.7 billion trade surplus with the United States last year; while China recorded $347 billion; the EU, $314.7 billion; Japan $68.9 billion; and Mexico $63.2 billion.
The U.S. administration is also scheduled to release a report on steel imports, following Trump’s order in April to examine whether they were threatening its “national security.” This will analyze all countries exporting steel to the U.S.
The reports are likely to be negative; considering they are based on the idea that trade deficits decrease jobs.
This might leave Moon fending off expected complaints from Trump on the deficit, and the free trade deal between the two countries. The latter has called the deal a “job killer.”
“When considering the negative sentiment within the U.S. government regarding trade deficits, the conclusion of these reports is somewhat expected. How we cope with them afterward thus matters more,” said Lee Dong-bok, a director at the Korea International Trade Association.
U.S. Trade Representative Robert Lighthizer has told U.S. lawmakers that the trade deficit following the free trade agreement with Korea had “a negative effect on the U.S. trade balance.”
If the U.S. report concludes that steel imports are threatening its national security, and takes measures such as tariff quotas, Korea’s steel manufacturers will face damages.
The trade ministry here said it is closely monitoring the situation to prepare for all possibilities.
“The government submitted its own analysis on trade with the U.S. on top of attending a public hearing by the U.S. Department of Commerce,” an official at the ministry noted.
The government pointed out that the U.S. trade deficit with Korea was mostly due to the expansion of the U.S. economy and growing demand there, coupled with a slowdown in Korea.
It also stressed that imports of Korean steel make up only 3 percent of total consumption by the world’s largest economy.
“Much of Korea’s increase in exports to the U.S. is linked with its investment there, and around 70 percent of its exports to the U.S. are components or other intermediate goods, not consumption goods. The government should convince the U.S. that the negative impact on U.S. jobs is limited,” said Chung Chul, a researcher at the Korea Institute for International Economic Policy.