US President Donald Trump has raised a major political storm in both the United States and the Republic of Korea, its long-time ally, by threatening to terminate the bilateral free trade agreement. While making the statement, Trump, it appears, was not thinking about narrowing the $17 billion trade deficit the US has with the ROK. Rather, his is a desperate bid to rewrite existing global trade rules in favor of the US.
Ever earlier, Trump has threatened to withdraw from bilateral or multilateral free trade agreements. He has repeatedly threatened to terminate the North American Free Trade Agreement and clamored to use trade remedy measures to impose punitive tariffs on imports from major trade partners. He has ordered the Department of Commerce to investigate steel imports under Section 232 of the Trade Expansion Act of 1962, which allows the imposition of tariffs on imports for national security reasons. And he has directed the US Trade Representative to launch an investigation under Section 301 of the Trade Act of 1974 into China's laws, policies and practices related to technology transfer, intellectual property and innovation.
The US' huge trade deficits are certainly behind Trump's threats to withdraw from free trade agreements. For example, the US had a trade deficit of $17 billion in goods and services combined with the ROK last year despite having a $10.7 billion trade surplus in services.
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