Amid Nuclear Tensions, Trump Mulls Exit From South Korea Trade Deal

September 4, 2017

By GLENN THRUSH and GARDINER HARRIS

https://www.nytimes.com/2017/09/02/world/asia/us-south-korea-trade.html

 

Robert Lighthizer, left on screen, the United States trade representative, attended a video conference with Trade Minister Kim Hyun-chong of South Korea last month. Credit Yonhap, via European Pressphoto Agency

WASHINGTON — President Trump is considering pulling out of a major trade agreement with South Korea as he tries to fulfill get-tough campaign pledges on international trade. But he has not yet made a final decision, two senior administration officials said Saturday.

The president’s top economic advisers remain deeply divided over a possible withdrawal from the United States-Korea Free Trade Agreement, as negotiators from both countries struggle to rewrite the five-year-old deal.

The debate comes as the United States and South Korea are working together to try to combat a growing nuclear threat from North Korea, which said on Sunday that it had tested a hydrogen bomb that could be mounted on an intercontinental ballistic missile. It is a more powerful weapon than the atomic bomb it had tested in the past.

In recent days, a frustrated Mr. Trump has pushed his staff to take bold action against a host of governments, including the one in Seoul, that he has accused of unfair trade practices. But many of his more moderate advisers, including the chairman of the National Economic Council, Gary D. Cohn, believe that such a move could prompt a trade war that could hurt the United States economy.

An industry publication, Inside U.S. Trade, first reported late Friday that the administration was considering withdrawing from the treaty as early as next week.

“Discussions are ongoing, but we have no announcements at this time,” a White House spokeswoman said in an email.

But Mr. Trump, asked during a trip to the Gulf Coast on Saturday whether he was talking with his advisers about the trade deal, said: “I am. It’s very much on my mind.”

The idea of potentially withdrawing seems to have been prompted by the breakdown in negotiations between South Korean officials and the United States trade representative, Robert Lighthizer, an American official with knowledge of the situation said.

An initial meeting generated little consensus, with South Korean officials offering to consider minor adjustments to the agreement but rejecting a wholesale renegotiation, angering hard-liners in the White House who have targeted countries like China, Japan, Mexico and South Korea that have large trade surpluses with the United States.

But it remains unclear whether the administration would actually withdraw from the deal, and industry representatives who have lobbied the White House say the president’s team has done little of the work — like a wide consultation with affected industries — needed before taking such a step.

The possibility of abandoning the agreement has alarmed economists and some members of the president’s own party who fear that such a move would force South Korea to block American manufacturers and farmers from a lucrative market.

“The president and Nebraska have a basic disagreement about trade,” said Senator Ben Sasse, a Nebraska Republican who has frequently criticized Mr. Trump. “His administration holds 18th-century views of trade as a zero-sum game. I side with our farmers and ranchers who are feeding the world now.”

Mr. Lighthizer and other administration officials, including Peter Navarro, an economic adviser to the president, have long complained that many South Korean industries, especially the automotive sector, enjoy government protections that make it harder for American companies to compete.

Scrapping the deal would also have profound geopolitical implications in the region, said Michael Green, an Asia expert at the Center for Strategic and International Studies who oversaw issues on the Korean Peninsula during the administration of President George W. Bush.

“One of the big reasons we decided to go forward with the agreement was to demonstrate to the South Koreans, North Koreans and Chinese that the U.S. was committed to this relationship for the long haul,” Mr. Green said.

That the administration would even consider canceling the agreement in the midst of the North Korean missile and nuclear crisis is astonishing, Mr. Green said.

“It’s probably all theater, but it has negative strategic consequences as we try to manage the North Korean threat,” he said.

 

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