Trump Wants Plans to Withdraw from South Korea Trade Deal

Posted on 09/03/2017 7:45 AM

Another Trump threat to withdraw from prior trade accord

President Trump has instructed advisers to prepare a withdrawal from the Korea-U.S. (KORUS) free-trade agreement, a move that would raise economic tensions with the U.S. ally at a time both countries confront a crisis over North Korea's nuclear weapons program. Under the terms of the KORUS pact, either side can pull out by giving 180 days’ notice.

Trade negotiators from the U.S. and South Korea held several meetings over the summer with American officials leaving unhappy with what they felt was Seoul’s unwillingness to make significant changes to the KORUS.

The president could decide to stay in the agreement in order to renegotiate its terms, but internal preparations for terminating the deal are far along and the formal withdrawal process could begin as soon as this coming week.

A White House spokeswoman said “discussions are ongoing, but we have no announcements at this time.”

Trump is scheduled to meet with top advisers in the White House on Tuesday to discuss the potential withdrawal.

Trump previously has threatened before to withdraw from the NAFTA trade pact, only to pull back and then again threaten to withdraw just this past week — those talks are continuing this weekend in Mexico City.

Some trade policy observes believe the latest threat is a negotiating tactic to bring Seoul back to the bargaining table. But like Mexico and Canada relative to NAFTA 2.0 negotiations, South Korean officials are reportedly well aware of Trump's negotiating bluster.

Trade officials in Seoul said it wasn’t appropriate to talk about what the two governments have yet to officially discuss. “The government is thoroughly preparing for all possibilities,” said a South Korean trade ministry official. Seoul would keep discussing the issue with Washington in an “open-minded” manner, the official said.

U.S. ag industry interests are increasingly frustrated over the meandering Trump administration trade policy, or the lack of one. U.S. meat exporters scored gains in the KORUS.

U.S. beef exports to South Korea reached $1.1 billion last year, up from just $582 million in 2012.

South Korea is the third largest foreign market for U.S. corn and the U.S. Grains Council said KORUS is partially responsible. "The Council strongly opposes withdrawal from … KORUS … an action that will lead to immediate and sustained losses in sales to our third largest corn customer,” the group said in a statement. “South Korea is an example of the transformational partnership available to U.S. grain farmers and their global customers through strong trade policy and overseas market development.”

U.S. wheat organizations urge administration not to withdraw from KORUS. U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) strongly urged the Trump administration not to withdraw from the U.S.-Korea Free Trade Agreement (KORUS). “We believe it would be irresponsible to unilaterally walk away from this or any other trade agreement,” said Mike Miller, USW Chairman and a wheat grower from Ritzville, Wash. “Withdrawing raises the specter of retaliation against agricultural exports and creates unnecessary uncertainty in the market. Any disruption in the relationship wheat growers have built in Korea over more than 60 years gives Australia, Canada and even Russia an opening to move in and take business away from us at a time when we are all struggling to stay profitable. KORUS, like the North American Free Trade Agreement, has been very good for American agriculture.”

"We think this trade agreement, negotiated in good faith and strongly supported in Congress, reinforces the Administration's stated goal to sell more agricultural products overseas,” said David Schemm, NAWG President and a wheat grower from Sharon Springs, Kan. “We support finding ways to improve any agreement, but let’s do that in a reasoned and respectful way, with input from all stakeholders so U.S. wheat farmers can gain greater access to world markets."

South Korea was the third largest volume importer of U.S. wheat in marketing year 2016/17 (June to May).

The U.S. Chamber of Commerce circulated a fact sheet saying that “aerospace exports to Korea have doubled to $8 billion” under the pact, while “exports of key agriculture products have soared as KORUS has begun to phase out double digit tariffs.” The Chamber notice warned that a pullout “would rupture White House relations with the business and agriculture community.”

The National Association of Manufacturers sent an “alert” email to members shortly after 8 a.m. Saturday that said, “We understand through multiple sources that. a notice of intent to withdraw. has been drafted.” The trade group urged its members “to weigh in as soon as possible with senior administration officials, Members of Congress and governors.” A similar flurry of business activity helped block the threatened NAFTA withdrawal in April.

A U.S. fact sheet said the U.S. trade deficit in goods with South Korea had more than doubled from $13.2 billion in 2011 — the year before the pact took effect— to $27.6 billion in 2016. It noted that the bilateral auto deficit made up about 90% of that deficit.

U.S. lawmakers want a greater role in ongoing negotiations and any decision to withdraw from any trade pact. The four Republican and Democratic leaders of the House and Senate trade committees sent U.S. Trade Representative Robert Lighthizer a letter in mid-July urging him to consult them closely as he reviewed KORUS, and to be careful about any dramatic breaks. “The U.S. trade agreement with South Korea remains a key cornerstone of U.S. economic and strategic engagement in the Asia-Pacific region,” their letter began.

South Korea is currently the U.S.’ fifth-largest market for agricultural exports thanks to KORUS. U.S. exports of key agricultural products benefiting from tariff cuts and the lifting of other restrictions under KORUS have seen significant growth.





$686 million

$810 million


$ 9 million

$30 million

Shelled Almonds

$74 million

$180 million

Fresh Cheese

$30 million

$147 million


$40 million

$109 million

Wine & Beer

$18 million

$33 million

U.S. cherry exports to South Korea were valued at $109 million in 2015, up 172.5% compared to 2011. In 2015, exports of citrus fruit were up over 25% from 2011, with lemon exports up 241.3% to $30 million and grapefruit exports up 47.8% to $13 million in 2015. The $810 million in exports of beef and beef products to South Korea in 2015 marked an increase of 18.1% between 2011 and 2015. Dairy products grew by nearly 37% from 2011, with the $147 million worth of fresh cheese exports showing a remarkable 398% increase from a base of less than $30 million before the FTA.

Trade Accord Impacts

Trade agreement opportunities


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