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U.S. President Donald Trump, left, and South Korean President Moon Jae-in discuss issues including security and trade at a joint press conference in Seoul Tuesday.   © Reuters
Economy

Looking to save US trade deal, Seoul eyes weapons purchases

Trump keeps up pressure on South Korea as a warning to NAFTA

SEOUL -- U.S. President Donald Trump pressed his South Korean counterpart Moon Jae-in to revise their countries' free trade agreement in talks here Tuesday, an issue Seoul aims to defuse by expanding imports of American military equipment.

The present bilateral deal "frankly has been quite unsuccessful and not very good for the United States," Trump said at a joint press conference with Moon after their talks. He repeatedly stressed the importance of Washington's partnership with Seoul, but offered blunt criticism on trade. Trump made addressing trade imbalances a top campaign issue last year.

The U.S. president brought up revising the trade pact during Moon's June visit to Washington as well. America's trade deficit with South Korea has doubled under the deal, and needs to be renegotiated, Trump insisted then.

Top negotiators from both sides convened in August in Seoul. South Korea said the trade imbalance and the FTA were unrelated, and declined to negotiate on revising the deal.

But in September, Seoul did an about-face. Visiting the U.S., negotiators learned through contacts in government and financial spheres that the Trump administration was really considering scrapping the FTA altogether. Realizing how serious the Americans were, the Koreans acquiesced in October and began preparing to renegotiate.

A sideshow?

As of 2016, the U.S. trade deficit with South Korea came to $23.2 billion -- its eighth-largest, and small compared to the imbalances with first-place China or No. 2 Japan. Yet Washington remains fixated on its free trade deal with Seoul.

This is because for Washington, "the U.S.-South Korea FTA is a trump card giving it the upper hand in renegotiating the North American Free Trade Agreement," said Ahn Duk-geun, a professor at Seoul National University familiar with trade issues.

NAFTA, not the South Korean FTA, is the real priority. "The U.S. trade representative does not have room to simultaneously renegotiate two free trade deals," Ahn said. "By dangling the possibility of scrapping the FTA with South Korea to show how committed it is, the U.S. aims to force its will on Canada and Mexico, which oppose it over renegotiating NAFTA."

Others suggest that Trump is angling for a win with the South Korean deal because the NAFTA talks are not going as hoped. The U.S. president "did not allude to canceling the bilateral FTA during summit talks," according to a high-ranking official in the Moon's office, but Trump's deep concern with the issue is certain.

The military solution

In response, Seoul is playing the weapons card. "South Korea will be ordering billions of dollars" of military equipment, Trump said at the press conference. Moon also said his country would soon begin "cooperating on acquiring and developing cutting-edge reconnaissance assets." Among the kit to be bought from the U.S. is equipment for South Korea's so-called "Kill Chain" system for preemptive strikes on the North's nuclear and missile facilities.

The parties are also discussing the South using or buying U.S. nuclear-powered submarines, said a source connected to the South Korean president's office. Seoul has been urging Washington to bring in the vessels to counter the North Korean threat of submarine-launched ballistic missiles. The move would strengthen national defense and slim the trade imbalance with one stroke. But whether Seoul will be able to draw the U.S. into a compromise over the FTA is unclear.

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