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By Yoon Ja-young
U.S. President Donald Trump's remark that he wants to renegotiate or undo the Korea-U.S. free trade agreement (KORUS FTA) means that he will demand South Korea make greater concessions.
The latest threat will force the Korean government to prepare for all possibilities involving the trade deal, analysts said Friday.
Trump told Reuters that he would "renegotiate or terminate" the free trade agreement, calling it a "horrible" deal.
Trump has been denouncing major free trade deals including the KORUS FTA as "job killers" since the presidential campaign last year.
Analysts said the odds for renegotiation are obviously increasing.
"When U.S. Vice President Mike Pence visited Korea last week, he said that Washington will reform the deal. Since President Trump mentioned a revision and even termination, the possibility has increased," said Lee Dong-bok, director in charge of FTAs at the Institute for International Trade.
However, he said Trump isn't likely to demand termination.
"It is still uncertain whether it is an official determination or just rhetoric. In the case of NAFTA, he previously mentioned scrapping it, but has now toned down this to a revision through negotiation. The situation regarding the KORUS FTA is likely to be the same. The United States has nothing to gain by scrapping the deal."
A ranking official at the Ministry of Trade, Industry and Energy said that the government will prepare measures for all possibilities.
"The government has not received an official request from the United States to renegotiate the KORUS FTA. We are trying to confirm details such as the intentions and backgrounds of the remarks through official channels," he said.
The official stressed that the government has prepared for all possibilities. "We will continue watching how it evolves. We will put forth efforts to explain how the deal has benefitted both Korea and the U.S."
Lee said the government will watch how the Trump administration deals with NAFTA.
"The government should monitor the U.S. moves on NAFTA, while preparing measures for all possible scenarios. The Trump administration is dissatisfied with the overall U.S. trade deficit, but this is due to differences in industrial structures, not particular items. We don't know yet which part of the deal it will demand to be renegotiated."
A professor at a Seoul university, who asked for anonymity, said that the government should focus on FTA beneficiaries who can move Trump.
"The farming states in the U.S., for instance, are one of the main pillars of his political support, and they have been benefiting from the KORUS FTA. If they come to face obstacles in their beef exports due to conflict over the trade deal, for example, they may withdraw support for him, which will pressure the U.S. President," he explained.
The Federation of Korean Industries (FKI), which represents the country's large businesses, showed concern that Trump's remarks will expand protectionism in global trade.
"As the United States Trade Representative mentioned in March, the KORUS FTA has been benefiting both countries. Following the signing of the deal, the trade of goods and services between the two countries increased to $146.8 billion in 2015 from $126.5 billion in 2011. U.S. services exports to Korea increased 23.1 percent to $20.5 billion following the FTA," it noted.
"If discussions continue, including renegotiating the deal, we will make efforts to minimize any damages."
