Latest news with #Korea-USFTA
Korea Herald
14-04-2025
- Business
- Korea Herald
Pushed by Trump's tariffs, East Asian rivals revisit free trade pact
Amid renewed economic talks, longstanding tensions, US pressure raise questions The unpredictable tariff policies of US President Donald Trump are bringing an unlikely trio in East Asia together -- South Korea, Japan and China -- as long-stalled free trade talks between the regional rivals have gained steam once again. Last month, just days before Trump so-called 'Liberation Day" on Wednesday, the start of his self-proclaimed "reciprocal" tariffs on most countries, amounting to the most sweeping tariff hikes since 1930, the three neighboring countries –- all hit with especially heavy tariffs -- held their first economic talks in six years. The top trade officials of Seoul, Tokyo and Beijing all agreed to bolster cooperation in economy and trade and to speed up negotiations for a trilateral FTA. Finance Minister Choi Sang-mok said that same day -- the same day Trump's 25 percent tariffs on South Korean goods took effect -- that the government would push for negotiations on the trilateral FTA as soon as possible. However, just hours after the new tariffs kicked in, Trump announced a 90-day pause for Korea, Japan and most other countries. Meanwhile, he upped the stakes on China, which now faces a staggering tariff rate of 145 percent. Negotiations for an FTA between the three countries have been on and off for more than a decade since they began in 2012. Around 16 rounds of official talks have taken place, but efforts were largely stalled due to geopolitical tensions and fears over domestic industry disruptions. The three economies all rely heavily on similar export-driven manufacturing sectors, producing automobiles, semiconductors and steel, with overlapping interests, prompting concerns that deeper market tie-up could harm domestic industries. Geopolitical and trade tensions have also been a major hurdle. These include: Japan's 2019 export controls on South Korea, China's apparent economic retaliation in response to Korea's deployment of the US THAAD missile defense system, and longstanding historical and territorial disputes that have repeatedly derailed cooperation. 'Existing bilateral deals such as the Korea-US FTA, and Korea and Japan's alliances with Washington, as well as issues involving North Korea have also acted as constraints,' said Park Inh-hwi, a professor of international studies at Ewha Womans University. Despite these constraints, the recent revival of talks seems to be driven by intensifying uncertainty among the three countries -- the economies of which are deeply intertwined with the US -- amid Trump's tariffs, observers say. "In the aftermath of Trump's tariff war, discussions around a Korea-Japan-China FTA have reemerged, as such a pact could help mitigate some of the risks posed by US tariffs," Park added. Many experts here acknowledge the long-term benefits of an FTA, but remain skeptical about its near-term feasibility. A successful FTA among the three countries could result in an economic bloc with a greater GDP than the European Union, which could potentially serve as a safeguard against Trump's erratic policies. The three countries make up 20 percent of the global population, while their combined nominal GDP reached $23.7 trillion in 2023, representing around 23 percent of global GDP and surpassing the EU's $18.6 trillion, according to World Bank data. 'It won't be easy,' said Park. 'There are benefits to the FTA, but the timing is complicated. It could appear as in opposition to Trump's trade policies or seem like forming a China-centered alliance, which could provoke backlash." Park Inn-won, professor emeritus at the College of International Studies at Korea University, echoed that sentiment. "Realistically, it's not simple, especially at a time when the US and China are playing a 'game of chicken' and South Korea relies heavily on both countries as top trade partners." Heo Yoon, professor of international studies at Sogang University, agreed on the difficulties, noting that China could use the FTA talks as part of its broader strategy to drive a wedge between the US and its closest Asian allies. 'This may be part of China's long practice of a wedge strategy of getting in-between when a crack appears among America's traditional allies, said Heo. 'Korea and Japan are both hit hard by the tariffs and China is trying to pull them closer. But if the US perceives Korea as drifting into China's orbit -- especially during a period without a president in Korea -- the consequences could be significant." Another industry watcher who wished to be unnamed echoed this view, noting that China is seizing on the current challenges as an opportunity to shore up ties with America's closest allies in the region. "China has been the most vocal in pushing for the FTA and is working to amend ties with the two countries, while Korea and Japan are being more careful, mindful of their relations with the US," the watcher said. Serving as leverage, message The evolving dynamic in East Asia also caught attention in Washington. A US senator recently sounded the alarm over the apparent closeness among the three countries, describing the photograph of the three ministers joining hands in Seoul as 'the most shocking image.' 'In a truly bizarre turn of events, we forced our allies and adversaries to try to find ways to work together,' said Democratic Senator Brian Schatz on the Senate floor last week, adding that the three countries are discussing an FTA as a response to Trump's policies. 'This is the most shocking image… To see them shaking hands, literally holding hands with a high official from China to indicate they're in this together against us. So it is true that Donald Trump is uniting the world. The problem is, he's uniting the world against us.' Amid such concerns in Washington, observers here note that the perceived alignment between China and the US' closest Korean allies could send a message to Trump and work as leverage as the tariff talks are underway. 'It can be used as leverage for talks with the US on tariffs,' said Heo, but he called for caution, as appearing too close to China could also prompt a backlash from the US, in his view. Park of Korea University sees this moment as an opportunity for Korea to expand its global economic presence and diversify trade relations. 'We are living in a time of 'every country for itself.' Under this dynamic, we need a bargaining chip (in talks with the US), to show what we are capable of in the long term," said Park. 'We must engage in active discussions to uphold the liberal economic order because if this liberal order doesn't recover, a small, open economy like Korea cannot survive." Park added that Korea must work to "expand its economic pie" globally. "We survive by maintaining and growing our economic pie," he said. "If we can't increase our shares in the US market, we have to create new ones elsewhere." In this context, a Korea-Japan-China FTA could become an important piece of the pie, Park noted, adding that other potential trade deals –- such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a mega deal of 11 Asia-Pacific nations -- could also be viable options.
Korea Herald
21-03-2025
- Business
- Korea Herald
Seoul, Washington agree to swiftly resolve 'sensitive country' listing
South Korea and the US have agreed to work together to quickly resolve issues surrounding Washington's designation of Seoul on its 'sensitive countries list," Korea's Industry Ministry said Friday. Korean Industry Minister Ahn Duk-geun met with US Energy Secretary Chris Wright on Thursday in Washington, for their first official talks. During their meeting, Ahn conveyed concerns regarding Seoul's inclusion on the Department of Energy's list of 'sensitive countries and other designated nations.' In response, the two countries agreed to cooperate closely and follow procedural steps to swiftly resolve the matter, the ministry said, without elaborating further. Ahn's visit comes after Seoul's discovery that the Energy Department had placed South Korea on the lowest tier of its sensitive countries list in January. The move has triggered worries in Seoul that it could hamper future collaborations in research and technology between the two allies. It was Ahn's second trip to Washington in less than a month, following a visit from Feb. 26 to 28. Despite the designation, Washington has assured Seoul that the measure, which is set to take effect on April 15, will have little impact on bilateral technology cooperation, according to South Korea's Foreign Ministry. The ministry also clarified that the designation stemmed from a security-related issue involving a research institute under the Department of Energy, not due to foreign policy matter. Beyond the 'sensitive country' issue, Ahn and Wright agreed to deepen cooperation in the energy sector between the two countries, including in areas such as liquefied natural gas, power grids, hydrogen and small modular reactors. The two nations also agreed to hold regular energy-related policy consultations and joint forums, according to the ministry. 'This visit to the US has confirmed both countries' commitment to resolve the 'sensitive country' issue and provided an opportunity to strengthen the momentum of Korea-US energy cooperation,' Ahn said in a statement. 'We also hope to find opportunities for expanding cooperation projects and investments between the two countries through close consultation on the Trump administration's energy policy and to lead the global energy market together.' While in Washington, Ahn is also expected to hold talks with key US officials, including US Secretary of Commerce Howard Lutnick on Friday, to address concerns over impending tariffs. Washington is preparing to impose reciprocal tariffs on all trading partners on April 2, raising concerns that Korea may not be exempted, despite its free trade agreement with the US. Ahn told reporters upon arrival at Dulles International Airport on Thursday that there are virtually no tariffs under the Korea-US FTA. "But there are some nontariff issues that have been raised and we are working to resolve them swiftly domestically," he said. Ahn added that he would discuss these concerns with US counterparts during his visit and seek solutions to ease Washington's worries.
Korea Herald
07-03-2025
- Business
- Korea Herald
Shin, Waltz hold talks, reaffirm NK denuclearization goal
Shin asks Waltz for 'productive communication, cooperation' on bilateral trade matters in response to Trump's speech to Congress South Korea's National Security Adviser Shin Won-sik held talks Thursday with his US counterpart Michael Waltz in Washington, where the two reaffirmed their commitment to the complete denuclearization of North Korea. During the hourlong talks, Shin and Waltz also agreed to work closely to devise and implement policies to counter North Korea in accordance with the United Nations Security Council resolutions, Shin told reporters at a press briefing in Washington on Thursday. The two also pledged to closely monitor North Korea's cooperation with Russia and China, he added. Shin said the National Security Council of Seoul and the White House would work together to lay out pangovernmental efforts by Seoul and Washington in the field of shipbuilding. According to Shin, topics discussed at Thursday's meeting included current hurdles in building, maintaining, repairing or operating US ships in South Korean shipyards. Regarding the recent remarks by US President Donald Trump, Shin explained that tariffs are barely imposed on US goods under the bilateral Free Trade Agreement. Shin also asked for productive communication and cooperation regarding trade matters between the two countries. According to Shin, his explanation was met with understanding from Washington. Earlier on Tuesday, Trump said in a speech to a joint session of the US Congress that countries, including South Korea, are unfairly imposing "tremendously higher tariffs (on the US) than we charge them," adding that South Korea's average tariff is four times higher than those of the US. On Wednesday, the Industry Ministry refuted Trump's claim, explaining that the effective tariff rate on US imports was about 0.79 percent in 2024. The ministry also added that although Korea's Most Favored Nation tariff rate on World Trade Organization member countries is 13.4 percent -- four times higher than US' 3.3 percent -- the rate does not apply to US goods under the Korea-US FTA. Shin, however, noted that his talks with Waltz did not touch on the potential renegotiation of a defense cost-sharing deal over US troops' stationed in South Korea, or Trump's complaint that Washington's security treaty with Tokyo is not reciprocal. He also declined to comment on the matter. It was Shin's first meeting with Waltz. Shin said he had not scheduled his next meeting with Waltz. In a press release by impeached President Yoon Suk Yeol's office on Friday, Shin and Waltz stressed the Seoul-Washington alliance's role in peace, security and prosperity on the Korean Peninsula and at a regional level at their talks. Shin also met Republican congressmen Sen. Roger Wicker and Sen. Pete Ricketts on the sidelines of his Washington visit. Shin is scheduled to return to South Korea Saturday.
