Gain in NK issue, problem in trade

By Kim Rahn

In their first meeting and summit in Washington, D.C., from Thursday to Friday, South Korean President Moon Jae-in and U.S. President Donald Trump agreed to prioritize North Korea’s nuclear issue among their diplomacy agendas, with Trump supporting Moon’s approach to reopen dialogue with Pyongyang.

But the two showed a wide gap on the trade issue, implying possible future conflict over trade deals including the South Korea-U.S. free trade agreement (KORUS FTA) which Trump has long criticized for causing a deficit with his country.

The two leaders seem to have built personal trust and friendship, which is important for them in seeking cooperation on various issues during what will almost be their whole terms in office. Trump said his relationship with Moon is “very very very good” and described it as “great chemistry,” according to a senior Cheong Wa Dae official.

Moon also invited Trump to visit South Korea within the year, and Trump accepted without hesitation.

However, on practical issues, it seems that the two nations had a diplomatic “war of nerves” to carry each other’s points. A joint statement, which was expected to be made before the two leaders make comments in front of the press, came out about seven hours after the event.

In addressing the North Korea issue, Seoul gained Washington’s support as the two leaders agreed they could open dialogue with Pyongyang under the right conditions and that Seoul take the leading role in inter-Korean talks.

Previously, Trump said that any negotiation with Pyongyang is possible only after denuclearization. But he and Moon agreed not to maintain a hostile policy toward the North and to “stand ready to offer a brighter future for North Korea if it chooses the right path,” according to the statement.

Although the statement did not say whether Trump agreed with Moon’s idea of a two-step solution for the nuclear issue _ first, a nuclear freeze and second, complete disarmament _ the statement implies that the two leaders had a general consensus on the need for a phased approach using both sanctions and dialogue.

But what they would and should do in each step of the process has not been set, so there is still the possibility of conflict between Seoul and Washington later.

Trade faces major surgery

On the trade issue, by contrast, Trump has poured out demands to Moon, calling for measures to fix the “trade imbalance,” which he believes mainly comes from the current FTA.

According to the joint statement, the two leaders said they would foster expanded and balanced trade and create reciprocal benefits and fair treatment between the two nations.

But at the beginning of the summit, Trump said, “We are renegotiating a trade deal right now with South Korea, and hopefully it will be an equitable deal. It will be a fair deal for both parties. It’s been a rough deal for the U.S., but I think that it will be much different and will be good for both parties.”

In a speech after the summit, Trump also said they are working to create a fair and reciprocal economic relationship, adding the FTA increased the U.S. trade deficit with South Korea by more than $11 billion since 2011.

But the Korean government denied any renegotiation of the FTA, saying the U.S. may see deficits in automobiles and steel but Korea sees deficits in agriculture and the service sector.

“During the summit, Trump raised questions about his country’s trade deficit and trade imbalance in automobiles and steel, calling for the need for certain measures or a new deal,” presidential chief of staff for policy Chang Ha-sung said. “Then Moon stressed reciprocal benefits and suggested working-level officials of the two countries conduct a joint survey about the effects of the FTA.”

Despite Chang’s explanation, it is to be seen whether or not Trump will demand renegotiation of the FTA in the near future or after the joint survey is finished.

Against expectations, the deployment of a U.S. Terminal High Altitude Area Defense (THAAD) battery in South Korea did not become a topic in the summit.

U.S. policymakers had expressed concerns about the possible withdrawal of the battery after late May when Moon ordered a full-scale environmental impact assessment of the system after finding out there were procedural flaws in the installation, suspending the full deployment.

During the visit, Moon explained to U.S. congressmen and government officials that the assessment is aimed at securing procedural legitimacy and that he will not reverse the deployment agreement made by his predecessor.