KORUS Amendments Released; MOU on Currency Manipulation Absent
The "agreed outcomes" to the U.S.-Korea Free Trade Agreement were published by the U.S. Trade Representative on Labor Day, and they lay out the language changes put in place to protect the U.S. light truck market from Korean imports for another 20 years. In the original KORUS, agreed to in 2011, the 25 percent tariff on light trucks would last until 2021. In the renegotiated KORUS, they last through 2041. "The publication of the text of the agreed outcomes follows the completion in mid-August of U.S. domestic consultation procedures," said the USTR in a news release. "Korea will now initiate the next step in its own domestic procedures, which is to open for public comment the provisional Korean translations of the outcomes to amend the KORUS Agreement."
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Although South Korea also agreed to quotas on its steel exports to the U.S. as part of that negotiation, the amendments do not get into Section 232 issues. "I thought I might hear something about that," said Simon Lester, associate director of the Cato Institute's trade policy studies center.
There is nothing in the release about currency manipulation, though that was promised when USTR announced the memorandum of understanding in March (see 1803260005). Back then, USTR said, "An agreement (memorandum of understanding) is being finalized on robust provisions to prohibit competitive devaluation and exchange rate manipulation in order to promote a level playing field for trade and investment. Strong commitments on transparency and accountability are included in the provisions."
"I bet they're still battling about that, they're still fighting about that. They're going to have some sort of side letter," Lester predicted.
Sen. Ron Wyden, D-Ore., the ranking member on the Senate Finance Committee, seized on the omission, with a statement that said: "the deal with Korea in the spring doesn’t actually have any commitments on currency, despite what was promised at the time. Trump’s trade negotiations aren’t tough, they’re tissue-paper soft."
Lester agreed, saying "I think this KORUS amendment modification is a pretty minor tweak. This isn't all that tough, it seems to me." But at the same time, he said, analyzing free trade agreements as tough or soft is missing the mark. "The political rhetoric about soft and tough, that's all just political nonsense," Lester said. The areas where Trump has truly been tough -- with steel and aluminum tariffs, and with tariffs on Chinese imports, Lester described as "all stupid toughness. We're harming ourselves to show [other countries] how tough you are."