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(EDITORIAL from Korea Times on Sept. 6)

2017/09/06 06:57

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Trump's lose-lose game

Ditching trade deal to poison ROK-US alliance

Is U.S. President Donald Trump a master negotiator or a closet strategist?

   Most Koreans hope the U.S. leader is the former but are beginning to worry he may be closer to the latter.

According to the Washington Post, Trump has instructed advisers to prepare to withdraw the United States from a free trade agreement with South Korea. Asked whether he was talking with his aides about the Korea-U.S. (KORUS) FTA, Trump confirmed it Saturday. "I am. It's very much on my mind," he said.

There may be two reasons. One, the genius of deal wanted to maximize Washington's leverage in the upcoming talks with Seoul to revise the bilateral free trade accord. Two, Trump might be ready to discard the five-year-old FTA to win bigger in the bargaining to change the much older and larger North American Free Trade Agreement and/or to make Seoul toe the U.S. line in dealing with North Korea's nuclear and missile provocations.

We are afraid the termination of the trade deal will end up a typical case of a lose-lose game. As various U.S. economists and industrialists have pointed out, the U.S. trade deficit with South Korea may not be due to the unfair trade accord but to macroeconomic factors, such as the difference in industrial structures of the two countries, disparate business cycles and the Fourth Industrial Revolution. Senator Ben Sasse, a Nebraskan Republican, said Trump's administration "holds the 18th-century view of trade as a zero-sum game." We can hardly agree more.

Losers will be not just industries whose price competitiveness will sharply weaken in the import markets of each country but also consumers, American and Korean. The only, if short-term, winner will be President Trump with rising approval rating among supporters.

Trump's threat couldn't come at a worse moment for South Korea, exposed to escalating nuclear blackmailing by the North and troubled by China's economic retaliation against Seoul's deployment of a U.S. anti-missile Terminal High-Altitude Area Defense (THAAD) system. If the two countries decide to terminate the deal, South Korean industries, including steel and carmakers, will likely lose $17 billion in exports over the next five years along with 250,000 jobs.

However, U.S. cattle breeders will lose one of their three largest beef export markets, and American carmakers will face sharply higher import duties in Korea. The biggest loss of all for Washington, however, will be that of one of its strongest allies in the world, as South Koreans will begin to reassess Korea-U.S. ties ― or their longtime patron itself.

President Trump, if he meant it, should rethink his plan.