September 4, 2017 9:42 am JST

Trump hints at withdrawal from US-South Korea free trade deal

HOUSTON (Reuters) -- President Donald Trump said on Saturday he will discuss the fate of a five-year-old U.S.-South Korean free trade deal with his advisers next week in a move that could see him pull out of the accord with a key American ally at a time of heightened tensions on the Korean peninsula.

Trump made his remarks to reporters while visiting hurricane-hit Houston a day after he spoke with South Korean President Moon Jae-in and struck a deal allowing Seoul access to longer-range missiles as well as a potential arms sale.

The U.S.-Korea Free Trade Agreement (KORUS), hammered out by Trump's Democratic predecessor Barack Obama, has been a frequent target for Trump, who in earlier interviews with Reuters threatened to withdraw from what he called an unequal deal in which Washington runs a goods trade deficit of almost $28 billion with Seoul.

"It is very much on my mind," Trump said in Houston when asked if he is talking to advisers and will do something about the pact this week.

The U.S. Chamber of Commerce said in an email to members that it and other business groups "have received multiple reports" that the Trump administration is prepared to notify South Korea of its intent to withdraw from KORUS on Tuesday, and possibly sooner.

The largest U.S. business lobby urged member companies to have senior executives call the White House and other administration officials to tell them not to proceed, and to enlist Republican governors in the effort.

"This is an all hands on deck effort," the group said in a memo seen by Reuters that recalled another emergency campaign in April to persuade Trump not to withdraw from the North American Free Trade Agreement (NAFTA).

Trump agreed to renegotiate NAFTA's terms but on Aug. 27 renewed his threat to scrap the 23-year-old trade pact, even as U.S., Canadian and Mexican trade negotiators were preparing for this weekend's second round of talks in Mexico City.

Trump is also likely to face resistance from within his own administration to any move to quit KORUS. National Economic Council Director Gary Cohn and other senior administration officials had opposed a unilateral NAFTA withdrawal.

Trump's comments on Saturday came amid a standoff over North Korea's missile and nuclear tests. North Korea sharply raised regional tension this week with the launch of its Hwasong-12 intermediate-range ballistic missile, which flew over Japan and landed in the Pacific.

Washington wants to change the South Korea deal to help cut its trade deficit with Asia's fourth-largest economy.

South Korean and U.S. officials began talks about possible revisions to the agreement on Aug. 22 but failed to agree on how to move forward. U.S. Trade Representative Robert Lighthizer, South Korean Trade Minister Kim Hyun-chong and the trade pact's joint steering committee participated in a one-day videoconference that ended without a decision on the next steps for possible revisions.

The pact was initially negotiated by the Republican administration of President George W. Bush in 2007, but that version was scrapped and renegotiated by Obama's administration three years later.

Trump has blamed the accord on his 2016 Democratic presidential election opponent, Hillary Clinton, who as Obama's secretary of state promoted the final version of the agreement before its approval by the U.S. Congress in 2011.

Pulling out of KORUS would mark the latest step taken by Trump to abandon the type of international trade agreement that had exemplified world economics for decades.

Days after taking office in January, Trump formally abandoned the Trans-Pacific Partnership (TPP), an ambitious accord brokered by Obama that would have joined a dozen nations from Canada and Chile to Australia and Japan in a complicated array of trade rules.

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