Economy
U.S. Seeks ‘Fairer’ Trade Deal with Korea
Written by Tim Triplett
July 12, 2017
The United States has called for a special meeting with South Korean trade officials to discuss modifying the U.S.-Korea Free Trade Agreement (KORUS). In a July 12 letter to the Korean trade minister, U.S. Trade Representative Robert Lighthizer requested a special session in Washington to address problems with the agreement, including market access in Korea for U.S. exports and the significant trade imbalance between the two nations.
“Korea is an important ally and key trading partner,” Lighthizer wrote, “and in order to strengthen our relationship, we need free, fair and balanced trade.” The United States has had a persistent goods deficit with Korea for two decades, a deficit that has doubled since the KORUS agreement took effect in March 2015, the letter states. “It is imperative that we work together to ensure that the economic partnership between the two countries is not only strong and vibrant, but also fair, and that the KORUS agreement benefits the U.S. economy as much as it does that of Korea.”
President Trump has called for a “renegotiation” of the trade pact and has threatened to terminate it if new terms cannot be reached. But the language in Lighthizer’s letter calling for the “discussion of modifications” appears more diplomatic and less likely to elicit a forceful response from the Koreans.
Trade of goods and services between the two countries totaled an estimated $144.6 billion in 2016. The U.S. trade deficit with Korea totaled $17 billion. South Korea is the third largest exporter of steel to the U.S. behind Canada and Brazil, shipping 3.5 million metric tons to the U.S. in 2016.
“It is critical that we achieve real progress that fosters a truly fair and level playing field, and a more balanced trade relationship,” Lighthizer wrote, calling for a joint committee meeting in Washington within the next 30 days.
Tim Triplett
Read more from Tim TriplettLatest in Economy
SMU Community Chat: Tariff-induced panic purchases, inflation, and calculating costs
Chief executive of the Institute for Supply Management (ISM), Tom Derry highlighted how reactive buying behavior has shifted the market into a quiet demand period. Derry presented ISM data during the weekly SMU community chat.
Architecture billings still sluggish despite project inquiry uptick
The Architecture Billings Index (ABI), a leading indicator for non-residential construction activity, declined for an eighth straight month in June.
Beige Book: Tariff pressures mount, flat outlook
All districts reported “experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction.”
Steel exports recovered in May but still historically low
US steel exports rose 10% from April to May but remained low compared to recent years. This came just one month after exports fell to the lowest level recorded in nearly five years.
AISI: Raw steel production ticks up near recent high
The volume of raw steel produced by US mills inched higher last week, according to the American Iron and Steel Institute (AISI). After steadily increasing in April and May, domestic mill output stabilized in early June and has remained historically strong since.