Korea needs to adjust to Trump's 'America first' policy

/ Korea Times photo by Choi Won-suk

By James Kim

On Jan. 20, we inaugurated the 45th president of the United States, Donald Trump. We will also have a new president in South Korea before the end of 2017. And given the departure of U.S. Amb. Mark Lippert, we will also have a new United States ambassador to South Korea, yet to be named.

We are now entering an uncertain and potentially transformative new era between the United States and Korea. President Trump has already executed on some of his campaign pledges, including the withdrawal from the Trans-Pacific Partnership, announced the building of the “wall” with Mexico along with renegotiating NAFTA (North American Free Trade Agreement), instituted major immigration reforms and has actually succeeded in convincing major companies to change their manufacturing footprint in favor of the United States. Everyone has to take President Trump very seriously.

The Korea–United States relationship has also been prominently mentioned by President Trump, of which the KORUS FTA (Korea-U.S. Free Trade Agreement) and the $23 billion trade deficit has been deemed a “negative” for the United States. Now is the time for the key stakeholders in Korea to truly sell the value of the KORUS FTA on a factual basis and support the key economic initiatives of President Trump, namely, $1 billion in infrastructure improvements (roads, bridges, airports and tunnels) and bringing back manufacturing jobs to the United States. In addition, we need to ensure that the American multinational corporations (MNCs) operating in Korea must have conviction that Korea is and can be an attractive country to continue with its foreign direct investment.

We all know that the KORUS FTA has been called a “Gold Standard” by numerous leaders. Korea is the sixth largest trading partner of the United States generating $350 billion in total volume. Evidence clearly shows that the FTA is benefiting both sides despite the $23 billion trade deficit in Korea’s favor. Two-way trade has increased 84 percent over the last decade and reached $115 billion in 2015. Actually, exports to the United States on non-FTA benefited products such as steel, semi-conductors and autos rose by 7.9 percent while those with tariff concessions rose by 6.9 percent. At the same time, the United States actually enjoyed a trade surplus in services, with tourism and IT leading the way. Korea also has the lowest deficit compared to China, Japan, Mexico, Germany and India.

If we were to successfully defend the win-win partnership between Korea and the United States, I believe both American MNCs operating in Korea and the many Korean companies with a significant presence in the United States should work together and “sell” the value proposition to the Trump administration. In the United States, Korean companies employ more than 45,000 citizens and furthermore, average salaries are higher than other companies based there. Companies such as CJ employ 180 Americans in Fort Dodge, Iowa; Lotte Chemical has 2,000 in Lake Charles, Louisiana: and Hankook Tire with 1,800 in Clarksville, Tennessee. I am sure these smaller, lesser known cities all value the Korean investment.

As for Korea, we must use the KORUS FTA platform to resolve issues that can be a source of contention. There still remains many issues where regulation is referred to as “Korea unique standards.” Top American companies operating here in Korea such as United, Met Life, Citibank, Phillip Morris, McDonalds, Fedex, Oracle, Nike and, of course, the company where I am CEO, General Motors, have their own unique challenges. Each of the leaders of these companies are the best and most important “cheerleaders” to help promote FDI in Korea. Without their passion for Korea, the headquarters of these companies will look at other options. For these reasons, the Korean government must engage and keep these CEOs confident about business opportunities in Korea.

In closing, now is a critical period for the Korean government, Korean companies and American businesses operating in Korea to collectively sell the value of the United States–Korea partnership. Given AMCHAM’s 64 year history and as the largest foreign chamber in Korea, it is well positioned to serve as the ideal bridge between the United States and Korea. AMCHAM will continue to support Korea during its annual “Doorknock” trip to Washington and via its constant engagement with the United States government.

James Kim is chairman of American Chamber of Commerce in Korea.