Illustration: Peter C.Espina/GT
US President Donald Trump said last week that he was considering whether to initiate the process of withdrawing from the US-South Korea Free Trade Agreement (KORUS). The exit process could start within the week, US media quoted sources as saying. Although Trump threatened the withdrawal at the beginning of this year, the pullout, if carried out, will likely trigger huge political fallout in the wake of Pyongyang's sixth nuclear test on Sunday.
Yet, Trump has met with more fierce reaction from within his country than from South Korea. Cabinet members urged Trump to think twice about his decision. The chairmen and senior Democrats on the House of Representatives Ways and Means Committee and the Senate Finance Committee issued a statement expressing concern. The American Chamber of Commerce asked members to urgently contact the White House and other senior officials to call on Republican governors and opinion leaders to push Trump into not making that decision.
However, such strong opposition seems unable to talk Trump out of his intention to withdraw. In fact, Trump's position on the matter seems to correlate with his stance on trade. By playing the withdrawal card, the Trump administration is attempting to kill two birds with one stone. Above all, Trump is looking to balance the US trade deficit.
Since Trump took office, his major objective when forming trade policy has been to reduce his country's trade deficit and reverse the trade imbalance. According to the US Trade Representative office, US-South Korean aggregate trade volume reached $145 billion in 2016, of which US had a trade deficit of $27.7 billion.
Trade Representative Robert Lighthizer complained that since the KORUS came into force in 2012, US exports to South Korea have declined, service exports have barely increased, and the deficit has doubled. Under Trump's orders, signatories of the North American Free Trade Agreement have conducted two rounds of renegotiations. If the US and South Korea can renegotiate their agreement, it will obviously help Trump to promote exports and reduce the deficit.
Trump's trading team is good at gaining leverage by any means to force others to make concessions. Trump knows well that the US withdrawal from KORUS will cause much more damage to South Korea than to the US. He therefore hopes that Seoul will yield to pressure and offer valuable trade concessions, such as increased market access and better protection of intellectual property rights.
Meanwhile, given tensions on the Korean Peninsula, the US withdrawal at this time may not backfire since South Korea relies on the US more than ever for guaranteeing its security.
It remains to be seen whether Trump's scheme will succeed, and it may just be a smoke screen to test South Korea's response. Yet the Trump administration's "big stick diplomacy" in trade has worked well on Japan, Canada and Mexico. South Korea is likely to play into Trump's hands and renegotiate the agreement or make compromise.
The US-South Korea alliance has become closer in recent years given Pyongyang's nuclear and missile activities. After he took office, Trump also made the North Korean nuclear issue a priority in the Asia-Pacific region, scaling up military exchanges and joint military drills with South Korea to deter Pyongyang and defend the US security commitment.
Meanwhile, South Korea decided to deploy the Terminal High Altitude Area Defense system to strengthen the alliance at the cost of its ties with China. South Korea-US social and cultural ties are also an inseparable part of their alliance. South Korea has become the fifth largest export market of US agricultural products. Billions of dollars of exports each year are a source of economic support for the US rust-belt states that supported Trump's election.
The threat of withdrawal at this point would obviously not help the consolidation of their alliance. South Korea may place less trust in the US and re-evaluate the alliance or even take countermeasures, which may lead to more trade frictions between the two countries.
For the US, its domestic pro-South Korea forces may go against Trump, which is not conducive to the advance of Trump's domestic agenda. This could damage the credibility of the US among its other allies.
It would be premature to say whether the US withdrawal from KORUS would force the breakup of the alliance. The US alliances with South Korea and Japan remain cornerstones of security in Northeast Asia, and Seoul will no doubt continue to rely on the US nuclear umbrella.
Trade issues are only one facet of their relationship. As long as the North Korean nuclear issue remains unresolved and South Korea's national security is not guaranteed, Seoul and Washington will be firmly bound by their mutual need for security, which is ultimately far more important than economic benefits.
The author is an assistant research fellow at the China Institute of International Studies. email@example.com