FTA renegotiations to slow down US exports, analysts say
By Park Hyong-ki
President Donald Trump said Tuesday that he is positive the U.S. will reach a "free, fair and reciprocal" trade deal with Korea as the two sides renegotiate their bilateral free trade agreement (FTA).
He also said Korea's increased ordering of U.S. military equipment will help reduce the U.S. trade deficit.
Trump's stance on the trade issue has seemingly softened, compared to his earlier comments, saying that the FTA was "horrible" and a "job killer" for American workers.
However, his strong insistence on the FTA renegotiations to gain a better deal for the U.S. will likely weigh on Korea's exports to the U.S. next year, analysts say.
Besides seeking international cooperation against North Korea's nuclear and missile threats, Trump has put a high priority on resolving the U.S. trade imbalance with East Asian economies.
Korea is expected to see record exports this year, which will enable the country to achieve 3 percent growth in its gross domestic product.
But depending on how the renegotiations will unfold, it will affect Korean exports of products such as cars and household goods, which popular in the U.S.
Semiconductors, which helped sustain the economy this year, will be partly and indirectly affected by the renegotiations.
"We are going to see technology exports keep on driving the economy next year, although it will be a bit slower than this year. The U.S. pressure for the FTA renegotiations will indirectly affect the country's exports of tech products such as chips," said Kim doo-un, an economist at Hana Financial Investment.
The U.S. will continue to use its foreign exchange report and the free trade deal to apply pressure on Korean trade to reduce the U.S. deficit.
The Department of Treasury has put Korea on its currency monitoring list twice this year.
"Trump has made this a promise since his election campaign, and ultimately, the U.S. is looking to pressure China and other countries it has a trade deficit with as well through the FTA renegotiations with Korea," Kim said.
Taking clues from the U.S. free trade relations with Korea, Japan said it will not forge a trade pact with the U.S., despite U.S. suggestions for a bilateral FTA instead of the Trans-Pacific Partnership (TPP). The U.S. pulled out of the TPP negotiations earlier this year as soon as he became President.
This indicates that Japan does not want to be dragged by the world's largest economy with this deal whenever it has a trade issue, like Korea, analysts say.
The U.S. President criticized Japan for its unfair trade practices, demanding the Japanese government buy more American military equipment and Japanese carmakers build more cars in the U.S. as a means to reduce its trade deficit.
After his visit here, he will leave for China, Vietnam and the Philippines.
By Park Hyong-ki
President Donald Trump said Tuesday that he is positive the U.S. will reach a "free, fair and reciprocal" trade deal with Korea as the two sides renegotiate their bilateral free trade agreement (FTA).
He also said Korea's increased ordering of U.S. military equipment will help reduce the U.S. trade deficit.
Trump's stance on the trade issue has seemingly softened, compared to his earlier comments, saying that the FTA was "horrible" and a "job killer" for American workers.
However, his strong insistence on the FTA renegotiations to gain a better deal for the U.S. will likely weigh on Korea's exports to the U.S. next year, analysts say.
Besides seeking international cooperation against North Korea's nuclear and missile threats, Trump has put a high priority on resolving the U.S. trade imbalance with East Asian economies.
Korea is expected to see record exports this year, which will enable the country to achieve 3 percent growth in its gross domestic product.
But depending on how the renegotiations will unfold, it will affect Korean exports of products such as cars and household goods, which popular in the U.S.
Grabbing attention is the outbound shipments of automobiles to the U.S. as Trump has taken issue with it.
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Semiconductors, which helped sustain the economy this year, will be partly and indirectly affected by the renegotiations.
"We are going to see technology exports keep on driving the economy next year, although it will be a bit slower than this year. The U.S. pressure for the FTA renegotiations will indirectly affect the country's exports of tech products such as chips," said Kim doo-un, an economist at Hana Financial Investment.
The U.S. will continue to use its foreign exchange report and the free trade deal to apply pressure on Korean trade to reduce the U.S. deficit.
The Department of Treasury has put Korea on its currency monitoring list twice this year.
"Trump has made this a promise since his election campaign, and ultimately, the U.S. is looking to pressure China and other countries it has a trade deficit with as well through the FTA renegotiations with Korea," Kim said.
Taking clues from the U.S. free trade relations with Korea, Japan said it will not forge a trade pact with the U.S., despite U.S. suggestions for a bilateral FTA instead of the Trans-Pacific Partnership (TPP). The U.S. pulled out of the TPP negotiations earlier this year as soon as he became President.
This indicates that Japan does not want to be dragged by the world's largest economy with this deal whenever it has a trade issue, like Korea, analysts say.
The U.S. President criticized Japan for its unfair trade practices, demanding the Japanese government buy more American military equipment and Japanese carmakers build more cars in the U.S. as a means to reduce its trade deficit.
After his visit here, he will leave for China, Vietnam and the Philippines.
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