How to Strengthen the U.S.-Korea Free Trade Agreement
Editor’s note: This piece is coauthored by Anthony B. Kim.
U.S. and South Korean trade officials agreed on Oct. 4 to work on changes to the U.S.-Korea Free Trade Agreement, commonly known as KORUS.
Neither side specified what changes would be sought to the five-year-old pact, and it is not yet clear whether the emphasis will be on expanding trade or curtailing it. Expanding trade would benefit both countries, while curtailing it would benefit specific producers but impose costs on average consumers and other businesses.
U.S. Trade Representative Robert Lighthizer said he will work to “resolve outstanding implementation issues as well as to engage soon on amendments that will lead to fair, reciprocal trade.”
South Korea’s trade ministry said "both sides shared an understanding of the need to amend the free trade agreement to further strengthen the mutual benefits.“
Behind those diplomatic niceties is a game of economic hardball that is likely to become noisy and controversial. That entails economic risk, but both parties ultimately need to preserve the strength of their overall strategic alliance.
As the United States’ strongest ally in the Pacific, and home to about 30,000 U.S. troops, South Korea occupies a unique front-line position in U.S. efforts to contain both North Korea and China, and the U.S. remains the major guarantor of South Korean sovereignty.
Neither party can afford to risk destabilizing the longstanding alliance because of a trade dispute.
The U.S.-Korea Free Trade Agreement enjoys strong support from some members of Congress, as indicated by a recent joint statement by bipartisan Senate and House trade leaders:
The U.S.-South Korea agreement (KORUS), negotiated under two presidents and approved by Congress, is a central element of that alliance.
Indeed, modifying the agreement does provide opportunities as well as threats. If the U.S. and South Korea approach the discussions with the goal of enhancing the dynamism and competitiveness of their economies, both parties could benefit.
If, instead, they come to the table determined to preserve or expand special benefits for their most politically powerful companies, economic freedom and growth are likely to decline in both countries.
It is notable that Washington and Seoul plan to take advantage of the agreement’s special "joint committee” to update the free trade agreement rather than start from scratch with a complete renegotiation, as in the North American Free Trade Agreement.
That committee needs to be as transparent as possible so as to prevent special interests from taking control of the negotiations.
It would be practical and constructive for the two allies to start laying the groundwork for expanding the existing framework by working together on the timely fulfillment of commitments made in the free trade agreement — perhaps even amplifying the effort to advance energy trade between the two nations.
The United States and South Korea are situated in a complimentary fashion, with the U.S. a reliable energy supplier and South Korea a strategic buyer. Advancing energy trade and security between the U.S. and South Korea is a natural and constructive step forward that leaders should keep in mind and even incorporate into the update of the U.S.-Korea Free Trade Agreement.
South Korea has proven to be a reliable and strong ally for America in advancing freedom, opportunity, and prosperity in the region and around the globe. But much more can be accomplished, and the United States and South Korea have a lot to offer to each other.
Washington and Seoul should move forward with an update of the U.S.-Korea Free Trade Agreement in a spirit of cooperation, friendship, and alliance.
Republished from The Heritage Foundation.