South Korea needs to be ready for any implications associated with possible changes in US trade policy ahead of the US election next year, according to the Korea International Trade Association on Thursday.
“This year is highly likely to be a watershed of the US trade policy that will determine the re-election of the President Donald Trump. Korean companies need to come up with countermeasures for both short-term implications in trade and possible changes in the mid- to long-term production network,” said Seol Song-i, a senior researcher at KITA’s center for trade studies & cooperation, in its latest report titled “The Implication of the US Trade Policy in 2019.”
The report said the Trump administration has done everything based on the nation’s trade law for the aim of “America First” and fair trade since the new government was formed.
Trump has implemented all of his seven campaign pledges related to trade that he made in 2016, the report said. They included the US withdrawal from the Trans-Pacific Partnership, the launch of Section 232 investigations into steel and aluminum and the renegotiation of the North American Free Trade Agreement.
“This year, the US administration is predicted to do the utmost to pass the new United States-Mexico-Canada Agreement, which will be a key to determine the success of trade negotiation with China, Japan and the European Union,” the report said.
After the US, Mexico and Canada officially signed the USMCA — a modernized version of the North American Free Trade Agreement — in November last year, efforts to ratify the agreement are currently underway within the three nations.
Seol said the US has the willingness to make the USMCA a model for trade negotiations with other nations and bring ideas to the negotiation table with China, Japan and the EU with the aim of maximizing economic profit of the US and highlighting the outcome of the Trump administration.
As for the trade dispute with China, the US is expected to toughen sanctions and monitoring of China’s nonmarket economy practice by, for instance, reforming the World Trade Organization, according to the report.
As the US push to reform the WTO is expected to be strong as part of keeping China in check, the appellate body of the WTO may be paralyzed at the end of this year if talks among member nations do not make progress.
The US sees China’s economic growth as serious challenges to the US economy and security so that the US will continue to monitor and impose sanctions for the “trade balance” in favor of the US, by prohibiting China’s unfair trade practices, technology extortion and currency manipulation, according to KITA.
“In response to the possible changes of the US trade policies, Korea’s trade authorities, related organizations and companies should be aware of the progress of the US trade policies and be ready for direct and indirect implications of the changes made,” Seol said.
“As for the discussion of WTO reform the US is likely to strongly push, Korea should also establish its situation by examining the local system, law and company demand.”
By Shin Ji-hye (firstname.lastname@example.org)