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Trump would be wise to ease up on Seoul

President Donald Trump last year called it a "horrible deal", one promoted by his election opponent Hillary Clinton when she was US secretary of state, and threatened to terminate it.

[WASHINGTON] The Trump administration has an understandable beef with South Korea. A trade pact struck back in 2011 didn't live up to expectations. As talks kick off to amend the deal, though, there will be an unusually difficult balancing act to strike.

Formal negotiations to modify the US-Korea Free Trade Agreement, known as KORUS, started on Friday, following two special sessions last year. An update could help American car and machinery makers, who haven't fared as well as economists originally anticipated.

President Donald Trump last year called it a "horrible deal", one promoted by his election opponent Hillary Clinton when she was US secretary of state, and threatened to terminate it.

The value of goods sent to South Korea in 2016 was lower than before the deal went into effect. Meanwhile, imports have increased by nearly US$20 billion, fuelling a trade in goods deficit that has more than doubled in five years.

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A weak won and tepid South Korean import demand are partly to blame. US carmakers also point to regulatory barriers. General Motors, Ford Motor and Fiat Chrysler Automobiles, for example, can ship over only 25,000 vehicles a year each based on US safety standards. Any more must comply with South Korean specs. Lifting the cap would provide a boost.

It's a question of how hard the administration wants to push amid more significant priorities. South Korea accounts for only about 3 per cent of total US trade in goods. By comparison, Canada and Mexico - bordering countries in the North American Free Trade Agreement, which is also being renegotiated - collectively make up about 30 per cent. There also may be trade action involving China, which could quickly consume the agenda and political capital.

What's more, dealings with Seoul are never solely - or even mostly - about trade. Previous US presidents advanced talks to help reassure an ally in the face of saber-rattling from the Kim family, which has escalated with Mr Trump taunting the current North Korean leader on Twitter over nuclear arsenals.

Diplomatic considerations are growing in significance, too. At least some US officials are worried that North Korea's emerging détente with the South may be an attempt to drive a wedge between Seoul and Washington. That means pushing for a better trade deal while trying to present a united front against Pyongyang. One may have to give.

US and South Korean officials met on Jan 5 to start formally negotiating amendments to the United-States-Korea Free Trade Agreement, also known as KORUS. US Trade Representative Robert Lighthizer said the agency is aiming to achieve "fair and reciprocal trade" during the discussions.

North and South Korean officials agreed to hold high-level talks on Jan 9 after a series of signals that relations between the two countries were starting to thaw. Mr Trump called the potential talks "a good thing". State Department spokeswoman Heather Nauert had earlier said that North Korea "may be trying to drive a wedge of some sort" between South Korea and the United States.

Mr Trump previously told Reuters in an interview in April 2017 that the pact was "unacceptable", calling it a "horrible deal" struck by his 2016 Democratic presidential election opponent, Mrs Clinton, who as secretary of state promoted the final version before it was approved by Congress in 2011.