US demands agro tariffs be lifted

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Korea Times | 5 Septembre 2017

US demands agro tariffs be lifted

By Park Hyong-ki

The United States has demanded South Korea eliminate all tariffs on U.S. agricultural goods, according to a news report.

Inside U.S. Trade, an online news outlet with a focus on global trade, reported last Saturday that Washington made the demand during trade negotiations with Korea at a joint committee meeting in Seoul last month.

It also sought a readjustment to their free trade agreement (FTA), allowing the U.S. to extend the period of tariff reduction on Korean agricultural goods by five to 10 years.

This could deal a severe blow to trade relations, as Korea has been adamant about being protective when it comes to agriculture.

This is because Korea cannot compete with the U.S. in terms of economies of scale, given that the U.S. has the capacity to mass produce agricultural goods at low costs.

It remains to be seen whether the U.S. also demanded Korea include rice for tariff elimination.

Even though Korea’s trade ministry did not confirm this, it did say that both sides dealt with all FTA issues at the meeting.

Also, Trade, Industry and Energy Minister Paik Un-gyu said Korea is preparing for all possibilities, including the U.S. exiting the trade pact.

“We are considering the possibility of the FTA’s termination,” Paik told reporters after a meeting with workers from the automobile industry Monday.

U.S. President Donald Trump has ordered his economic advisers to start preparing for a withdrawal from the agreement.

This comes after both sides only reconfirmed their differences on trade.

Even though President Trump did not use the word “termination” of the FTA, he has often criticized the agreement as one of the worst deals made for the U.S., saying it has only killed American jobs.

Along with the NAFTA trade pact with Mexico and Canada, the U.S. has sought for renegotiations to reduce its trade deficit.

The U.S. trade representative said its deficit doubled to $27.6 billion in 2016 since the deal became effective in 2012.

The American Chamber of Commerce in Korea (AMCHAM) said the termination of the agreement would only hurt both economies and the alliance.

“Termination of the agreement will have a severe damaging effect on the economy, and we are also concerned about a deterioration of the relationship between the U.S. and Korea, leading to anti-American sentiment,” AMCHAM said in a statement.

“AMCHAM is supportive of efforts to amend and adjust the agreement to better cater to the changing business environments in both the U.S. and Korea. It is indeed important to note that the FTA has been the platform through which the two nations are able to increase cooperation and resolve potential issues.”

hyongki@ktimes.com

source: Korea Times