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USTR asks for industry advisors' input on KORUS by Aug. 15

August 5, 2017

The Office of the U.S. Trade Representative has asked a group of industry advisers to provide feedback by mid-August on modifications the U.S. could seek to its free trade agreement with Korea.

Sources told Inside U.S. Trade that USTR recently asked its industry trade advisory committees for ideas on the implementation of the agreement and issues “impacting fair trade” with Korea.

The advisory committees “provide detailed policy and technical advice and recommendations to the secretary of Commerce and the United States Trade Representative regarding trade barriers, negotiations of trade agreements, and implementation of existing trade agreements affecting industry sectors; and perform other advisory functions relevant to U.S. trade policy matters,” according to USTR.

The committees were asked to weigh in on potential modifications to or continuation of duties or concessions under the five-year-old agreement, known as KORUS. Those comments must be submitted by Aug. 15, sources told Inside U.S. Trade.

USTR Robert Lighthizer on July 12 officially requested a special session of the KORUS joint committee under the deal’s Article 22.2.4. Lighthizer said he wanted the session to be held “soon,” in Washington, DC.

KORUS Article 22.2.4 states that “Unless the Parties otherwise agree, the Joint Committee shall convene in special session within 30 days of the request of a Party, with such sessions to be held in the territory of the other Party or at such location as the Parties may agree.”

The 30-day time frame ends on Aug. 11, before the deadline set for the advisory committees to provide input.

Sources said the timing of the request for input suggests the two countries will not convene for their special session on or before Aug. 11.

They said the administration was likely planning to use the ITAC input to inform its approach to the meeting with South Korea. They also noted that Lighthizer’s schedule immediately before and after Aug. 11 will be busy: He will lead the U.S. delegation to Togo for the Aug. 8-10 African Growth and Opportunity Act Forum, and on Aug. 16 he will kick off the first round of NAFTA modernization talks in Washington.

Seoul, in a response to the U.S. request sent to Lighthizer on July 24, pointed to the text of the agreement in maintaining that the special session should be held in South Korea.

Korea’s minister of trade, industry and energy, Paik Ungyu, in his letter to Lighthizer, also asked the Trump administration to postpone the meeting until his new trade minister was in place. The new minister took office this week.

KORUS, however, gives the parties the option to deviate from the 30-day time frame and to negotiate the location of the joint committee’s special session.

Sources said the two sides have been engaged in conversations since the special session was requested but that no agreement had been stuck on the timing or the location of the meeting.

A USTR spokeswoman told Inside U.S. Trade that "the administration is committed to moving as quickly as possible toward reviewing and improving KORUS through the Joint Committee process."

Sources expressed doubt about the two sides coming to an agreement soon, however, because, they claimed, Seoul is unlikely to back down from its stance that the U.S. should follow the text of the agreement.

These sources emphasized that the new Korean government, led by President Moon Jae-in, cannot afford to be seen as being pushed around by the Trump administration.

While Trump has called for a renegotiation of KORUS, Lighthizer’s letter said the U.S. was seeking a “modernization” of the deal, with a special focus on the bilateral trade deficit with Korea -- something that Lighthizer, Trump and other administration officials have long lamented.

Korea, on the other hand, is not interested in making changes to the text of the agreement and instead wants to focus on addressing outstanding implementation issues, sources said.

Seoul’s attitude toward the special session is defensive, sources said, because “Korea didn't ask for a renegotiation,” and Trump’s team has yet to outline what modifications it is seeking through the first-ever special session meeting.

Sources suspected USTR's insistence on holding the meeting in Washington was driven by the desire to convey the message that the Trump administration was committed to “fixing” trade agreements it claims have hurt U.S. workers. That political message, they added, will gain less attention in the U.S. if the meeting is held in Korea.

South Korea's new trade minister, Kim Hyun-chong, said last week that he plans to be aggressive in trade negotiations. “There is no future in trade if we keep to a defensive position,” Kim Hyun-chong said in his inauguration address on Aug. 4, according to a Korean business publication.

Kim was the country's chief negotiator in the KORUS talks.

“We would be defeated if we navigate trade policy in existing predictable framework, whereas the global trade order has changed from the wave of protectionism and populism,” Kim said, according to the report.

A separate report on the speech from the Yonhap News Agency said Kim pledged to seek a “balance” with Korea's trading partners. “We will make efforts consistently and aggressively to strike a balance in terms of shared benefits with our major trading partners,” Kim said, according to the report.

Kim will serve as Seoul's co-chair for the special session. USTR has yet to announce his U.S. counterpart. According to KORUS, the trade officials can either chair the meeting themselves or pick designees.

Some sources said Michael Beeman, assistant USTR for Japan, Korea and APEC, could be named co-chair, while others maintained that Lighthizer likely would be tasked by President Trump to lead the U.S. team. -- Jenny Leonard (jleonard@iwpnews.com)

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