The US and the Republic of Korea recently agreed upon changes to the US-Korea free trade agreement, known as KORUS FTA. Both the parties will reduce the trade deficit and make sure that the policy is good deal for the US workers and businesses.
A Memorandum of Understanding (MoU) is also being finalized to stop competitive devaluation and exchange rate manipulation in order to provide equal opportunities for trade and investment.
The changes announced, include, customs improvement under which Korea will amend its’ time consuming and costly verification procedures. The origin of exports under KORUS FTA will now be verified according to a newly formed set of principles. Furthermore, a committee will also be formed to monitor and address future issues.
In July 2018, the US initiated talks on changes to KORUS and planned future meetings to be held in August and October in Seoul, Korea along with the offices of US Trade Representative, respectively. A meeting was arranged in Washington DC in January this year, the first between both the parties since the completion of related domestic procedures in Korea in late December 2017 and in Seoul between January 31 and February 1.
Ever since the KORUS went into effect in 2012, the US trade deficit in goods with Korea increased by 73 per cent to US $ 22.9 billion in 2017 and the overall deficit increased by 70 per cent to US $ 10.7 billion.
This move intends to re-balance the trade between the nations. According to the office of US Trade Representative this move will also strengthen the national security relationships between two countries.
Robert Lighthizer, US Trade Representative, said, “The improved KORUS agreement reflects the President’s leadership in delivering more reciprocal trade outcomes benefiting US workers, exporters, and businesses.”. He added that both the nations have strengthened a vital economic relationship by agreeing to substantial improvements to KORUS that will not only help in re-balancing the trade and reduce our trade deficit but also help expand US export opportunities.
