U.S. President Donald Trump has instructed advisers to prepare to pull out of a free-trade agreement with Korea altogether after Seoul declined to discuss revising it. -South Korea free-trade agreement with his advisers following a newspaper report that he's considering terminating the pact.
Trump acknowledges that he's discussing the future of the agreement with advisers but isn't saying much more than that.
South Korean and US officials began talks about possible revisions to the agreement on August 22 but failed to agree on how to move forward. The US and South Korea are aligned in heightened standoff over North Korea's nuclear program.
As Trump considers giving notice to South Korea of US withdrawal from the pact, he faces a potential divide among his advisers.
Alabama exports millions of dollars in goods to, and imports millions worth of good from, South Korea...primarily because the only Hyundai plant in the U.S.is in Montgomery.
Although senior White House officials stated that a final decision has not been made, Inside US Trade reported the administration may be considering withdrawing from the trade deal as early this next week.
"While some people view Trump's threats as being bluffs, in my expert opinion, Trump deciding to back out of the Korea-US Free Trade Agreement is a real possibility", Yang Jun-sok, an economics professor at Catholic University of Korea, told The Korea Herald.More news: North Korea Nuclear Test Would Be 'Absolutely Unacceptable': Shinzo Abe
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South Korea is "thoroughly preparing for all possibilities and will closely monitor" the USA developments over the trade agreement, the ministry official said, according to Yonhap. A White House official noted that US Trade Representative Robert Lighthizer met with Korean officials in July to begin negotiations.
Trump's push to revise the deal is part of his broader drive to tackle unfair trading practices and cut the trade deficit.
Trump was said to have been angered by the trade representatives' meeting last month, which is believed to be the reason why he demanded his advisors consider a withdrawal. If true, the move would deal a big blow to the relations between the allies, stoking economic tension at a time of escalated threats from North Korea.
Trump is weighing the issue at a perilous moment for the Korea peninsula. South Korea could also decide to refuse any discussions with Mr Trump, kicking off a trade war between the two countries. South Korea has been accused of dumping and subsidizing steel products.
Korea's USA exports have dipped from $36.5 billion past year to $35.7 billion as of the end of June.
The American business lobby group stressed that pulling out of the pact will only rupture relations between the White House and US businesses, particularly the agricultural community, citing that exports in aerospace have doubled to $8 billion thanks to the free trade pact while agricultural goods exports to Korea soared thanks to the phasing out of the double-digit tariff.