President Donald Trump’s America-first policy is putting more pressure on the Korean economy which is already suffering Chinese economic retaliation against the placement of a U.S.missile shield here.
Trump’s trade negotiators have successfully brought South Korean officials to the renegotiation table for the Korea-U.S.Free Trade Agreement (KORUS FTA).
The U.S.trade commission has set the stage for the real estate mogul-turned-president to impose safeguard restrictions on washers made by Samsung and LG Electronics.
In the wake of the growing trade pressure, the government is scrambling to hold meetings with relevant companies this week.
But it appears not to have much to do.
Fears that Trump is crazy enough to pull out of the trade deal may scare Korean government officials into accepting more demands from the Trump administration, analysts say.
“Trump’s America-first policy and his protectionist rhetoric will continue to force Korean negotiators to make more concessions,” said Sung Tae-yoon, economics professor at Yonsei University.
“His policy is focused on maximizing American interests using trade pressure, so Korean companies rivaling U.S.players will obviously face stronger trade pressure from the Trump administration.”
An industry official echoed Sung’s view.
“Many declining American companies try to exploit the America-first policy that helps embolden them to indiscreetly take trade cases to the trade commission to turn the tables.That started after the advent of President Trump this year,” the official said, declining to be named.
“And it will continue for the time being, posing a major threat to our economy.”
The U.S.International Trade Commission unanimously determined on Oct.5 that Samsung and LG’s large residential washers imported from Korea to the U.S.are harming the U.S.industry following its four-month investigation prompted by a safeguard petition Whirlpool filed May 31.
A safeguard action is taken to protect a U.S.industry from a sudden jump in imports causing or threatening damage to domestic production.Other nations can also take the measure but small economies rarely do so against bigger ones for fear of retaliation.
The investigation will move to a remedy phase and a public hearing is scheduled for Oct.19 before coming up with its remedy recommendations like specific tariffs or quotas that will be forwarded to Trump by Dec. 4.
The nation’s two appliance companies exported a combined $1 billion (1.14 trillion won) worth of large residential washing machines to the U.S.last year.Samsung holds a 16 percent market share and LG holds 13 percent, while Whirlpool holds 38 percent.
FTA renegotiations
One day earlier, Seoul and Washington agreed to initiate amendment negotiations at the U.S.government’s request in the second special session of their joint committee.It is likely to kick off as early as January.
Sticking with his campaign pledge, Trump has trumpeted his determination to revise the five-year-old trade pact, citing a snowballing U.S.trade deficit with Korea.
In response, the Korean government has stood firm against making any revisions to the agreement, calling for a joint review of its effects on the two economies in advance.
However, Trump’s repeated threat to unilaterally terminate the trade pact forced Korea to throw in the towel after merely two rounds of talks.
According to the U.S.website Axios, Trump urged U.S.Trade Representative Robert Lighthizer to tell his Korean counterpart, “if you don’t get concessions, this guy’s so crazy he could pull out any minute” in accordance with the “madman” theory.
The automotive and steel sectors that the U.S.blames for the trade deficit are likely to be high on the agenda during negotiations.
In addition, the U.S.side is expected to demand an abolishment of tariffs on American agricultural products that the Korean government strongly opposes.
The increasing U.S.trade pressure comes as many Korean business entities are already taking the brunt of the Chinese government’s retaliatory actions against the installment of a U.S.Terminal High Altitude Area Defense (THAAD) battery here.
Experts say the government needs to step up efforts to help local companies handle growing trade pressure.
“Korean firms face international business challenges, and the government should seek ways to help them hold up,” Sung said.“Excluding a few companies holding dominant status such as semiconductors, many others are confronted with troubles.”
On Wednesday, officials from the trade and foreign ministries and Samsung and LG representatives will meet to discuss countermeasures ahead of an Oct.19 public hearing in the U.S.on possible remedies.
