The US and the Republic of Korea today (4 September) agreed changes to the US-Korea Free Trade Agreement (KORUS) agreement, that both parties say, will reduce the trade deficit and ensure the policy is a “good deal” for US workers and businesses.
In July 2018, the United States initiated talks on changes to KORUS, with meetings subsequently held in August in Seoul and in October at the offices of the US Trade Representative. Additional talks were also held in Washington DC on 5 January, the first between both sides since the completion of related domestic procedures in Korea in late December 2017, and again in Seoul between 31 January and 1 February.
In March this year, the two sides reached an agreement on changes to KORUS, which included an exemption on the 25% additional tariffs on steel imports.
The changes announced today include “customs improvement”, which will require Korea to address “long-standing concerns with onerous and costly verification procedures” through agreement on principles for conducting verification of origin of exports under KORUS, and the establishment of a working group to monitor and address future issues that arise.
A Memorandum of Understanding is also being finalised to stop competitive devaluation and exchange rate manipulation in order to promote a level playing field for trade and investment.
Since KORUS went into effect in 2012, the US trade deficit in goods with Korea increased by over 73% to US$22.9bn (2017), while the overall deficit increased 70% to $10.7bn. The move – that aims to rebalance trade between the countries, according to the office of the USTR – will strengthen their national security relationship.
“The improved KORUS agreement reflects the President’s leadership in delivering more reciprocal trade outcomes benefiting US workers, exporters, and businesses,” says US trade representative Robert Lighthizer. “The United States and Korea have strengthened an important economic relationship by agreeing to substantial improvements to KORUS that will help rebalance our trade, reduce our trade deficit, and expand US export opportunities.”