U.S. President Donald Trump is asking South Korea to shell out $1 billion because of a trade deal he said he is not happy with.
Trump told Reuters Thursday that the United States may rework or nix a free-trade agreement it has with South Korea, and that the $1 billion collected from the city of Seoul will be used to pay for a U.S. missile-defense program. Trump said the existing agreement, known as KORUS, is “horrible” and “unacceptable,” and it must be reworked in light of an overhaul of the Free Trade Agreement (NAFTA) with Canada and Mexico.
“It is unacceptable,” Trump told media. “It is a horrible deal made by Hillary (Clinton). It’s a horrible deal, and we are going to renegotiate that deal or terminate it.”
Clinton championed the agreement before it was approved by Congress in 2011.
As for the anti-missile portion of a reworked agreement, there is no word whether South Korea will foot the billion-dollar bill. That was evident Thursday as Seoul’s financial markets dipped with Trump’s announcement.
In response, South Korean government spokesmen said the country planned to stand behind the 2011 agreement and that South Korea’s trade minister said it is not aware of an official renegotiation. The minister said Seoul would focus its efforts on explaining to the United States the existing benefits, calling the agreement “mutually reciprocal.”
Officials say global demand for cars and electronics is on the rise in South Korea, which could also be felt in other Asian countries as manufacturing sees an increase.
While Hillary Clinton promoted the KORUS deal, it was initially negotiated by the George W. Bush White House in 2007. The deal was then renegotiated by the Barack Obama administration in 2010. It took effect in 2012 and has since resulted in a trade deficit with South Korea of $27.7 billion.
As for a reworked deal, Trump’s demand of $1 billion will pay for the United States’ Terminal High-Altitude Area Defense (THAAD) missile system currently being used in South Korea. The system is in place to defend against missile strikes from other countries, namely North Korea.
Trump said it was appropriate for South Korea to pay for the system, saying it’s “phenomenal” and that it “shoots missiles right out of the sky.”
South Korean defense leaders responded, saying the deal to fund the anti-missile weapon is fair, as South Korea provides its land for deployment and the United States pays for operation and maintenance.
With an upcoming election in South Korea, Moon Jae-in, the county’s leading presidential candidate, told Reuters that an incoming government should have a choice whether to participate in the system as part of the existing deal or a reworked agreement. The election is May 9.
A top Moon Jae-in advisor said South Korea would not agree to Trump’s demand if the United States continues to operate the missile system. The THAAD system has been deployed in South Korea since March. It was installed by Lockheed Martin Corp.
The THAAD system costs a little over $1.2 billion. Reuters reported that a U.S. State Department source said the government would not want to sell it to South Korea. The insider said it is integrated with other weapons the United States has stationed in Korea and retains the right to deploy them.
The announcement of a new deal with South Korea comes on the heals of the United States withdrawal from the Trans-Pacific Partnership pact. The Washington Post reported that the Trump administration is also eyeing new trade deals with Japan.
Vice President Mike Pence visited Tokyo last week in hopes of spurring economic talks with the island nation.
“We seek trade that is free,” Pence told reporters. “We seek trade that is fair.”
[Featured Image by Getty Images]