Tag Archive | "US – ROK Relations"

U.S.-Korea Relations: Don’t Drive a Wedge

By Mark Tokola

There is a small but growing body of commentary arguing that Washington and Seoul are drifting apart on North Korea policy.  At the headline level, there clearly is a difference in tone between President Trump’s tough rhetoric and President Moon Jae-in’s insistence that the only acceptable resolution to the North Korean nuclear issue is a peaceful one.  Extrapolating from this, commentators have praised or condemned Donald Trump for upping the stakes on armed conflict on the Korean Peninsula; and have praised or condemned Moon Jae-in for putting a premium on peaceful engagement.  Trump has become either a “decisive leader” or a “war monger,” and Moon either a “man of peace” or an “appeaser.”  There are significant dangers to letting these caricatures take hold.  One of Kim Jong-un’s dreams would be for a rift to develop between the United States and South Korea.  It should be one of the last things we would want.

It would be untrue to say that rhetoric doesn’t matter.  It certainly does matter as a signal of intentions.  However, policy doesn’t only consist of rhetoric.  Look more closely at what the Trump and Moon Administrations have said and done in regard to North Korea.  Both have insisted that their goal is denuclearization.  Both have said that they do not seek regime change but rather a change in North Korean behavior.  Both have said that they seek a peaceful resolution of the crisis.  Both have emphasized the important role China should play in restraining North Korean behavior.

Even in the details of their policies, President Moon and President Trump have agreed: (1) to deploy THAAD in the face of public protests in South Korea; and, (2) contrary to the desires of pro-engagement voices in both the United States and in South Korea, they have both rejected the Chinese proposal of a “dual freeze” to halt U.S.-ROK military exercises in purported exchange for a North Korean testing freeze.  Moon Jae-in has been outspoken that North Korean nuclear and missile tests are unacceptable.  Like President Trump, President Moon has warned North Korea that an attack on his country would be met with an overwhelming military response.

Moon Jae-in’s policy towards North Korea does differ from that of his conservative predecessors Park Geun-hye and Lee Myung-bak.  He places more emphasis on unification as a long-term process of integration.  The border between the two states would gradually blur as the systems merged through increased economic cooperation and people-to-people ties — inevitably but not hurriedly along democratic and free market lines.  His conservative predecessors placed more emphasis on unification taking place in the nearer term, and on the need to prepare for a single, unified state.  There is not a vast different between Moon Jae-in’s vision of North-South integration and Park Geun-hye’s early policy of “Trustpolitik” – which is yet another reason for Americans not to jump to conclusions about Moon being ‘soft’ on North Korea.

The differences between the Korean progressives and conservatives are not ones that should roil the U.S.-ROK alliance.  The U.S. dealt successfully in the past with progressive South Korean administrations.  No South Korean political leader of note believes that South Korea would benefit from the opening of a gap between the U.S. and South Korea.  There is widespread support for the alliance among the South Korean people and for a U.S. military presence in Korea. For the United States’ part, far from insisting that South Korea not deal with North Korea, long-standing U.S. policy has been to tell Pyongyang that they must deal with South Korea.

The real mystery is why North Korea has not bothered to attempt to drive a wedge between Seoul and Washington.  Kim Jong-un could easily do so by responding to President Moon’s attempts to engage in ways that could complicate the alliance.  Kim Jong-un could offer to reopen the Kaesong Industrial Complex on South Korea’s terms, or could invite President Moon to Pyongyang for a summit, or could offer peace and arms control talks on the condition that U.S. forces be reduced or removed from South Korea.  Instead, Kim Jong-un has not even bothered to reply to South Korean initiatives to engage.  Furthermore, Kim Jong-un has said that Moon Jae-in is nothing more than a puppet of the U.S. and may be “even worse than his predecessors.”  Kim Jong-un may not be trying to split the alliance because he has not seen an opening to do so – yet.

Two reasonable, basic principles for the U.S. in dealing with North Korea are: first, do nothing that damages the U.S.-ROK alliance; and second, do nothing that strengthens Kim Jong-un’s position.  Putting Donald Trump and Moon Jae-in into opposing camps unnecessarily does both.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Photo from Aram Kudurshian’s photostream on flickr Creative Commons.

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Agreement to Renegotiate KORUS FTA Removes Threat of Withdrawal for the Moment

By Troy Stangarone

Shortly after the first summit meeting between Presidents Donald Trump and Moon Jae-in, the United States notified South Korea that it would like to convene a meeting of the Joint Committee under the U.S.-Korea FTA, or KORUS FTA, to discuss amending the agreement. Amending the KORUS FTA has been an objective of President Trump since last year’s presidential campaign and after the most recent meeting of the Joint Committee the United States and South Korea have agreed to renegotiations.

This will be the second time that the United States has pushed to renegotiate the KORUS FTA, which was originally signed in 2007 but not implemented until 2012. Much as was the case after the agreement was originally concluded in 2007, the new talks will likely focus on addressing issues in automotive trade.

Since coming into force, the United States trade deficit with South Korea has grown from $13.2 billion to $27.7 billion, but is down 28.1 percent through August. Over the same period, the United States trade deficit in the automotive sector has grown 77 percent to $24 billion and accounts for nearly 90 percent of the overall U.S. trade deficit with South Korea according to USTR.

While the automotive sector will be one of the key issues in talks, other issues that could potentially be discussed include implementation issues or revisions related to legal services, agricultural tariffs, data localization, digital trade, rules of origin and investment protections. While not all issues will apply, the ongoing talks over NAFTA also provide a good guide to the administration’s potential goals. At the same time, we should also expect South Korea to develop a list of areas where it would like to see changes that would be favorable to it as well.

Before entering into formal talks to amend the FTA, South Korea will need to undergo domestic consultation procedures including conducting an economic feasibility study, public hearings, and making a report to the National Assembly. As long as any South Korean requests do not require changes to U.S. law, the United States will be able to conduct the negotiations without utilizing the procedures under Trade Promotion Authority and already has authority to make any tariff changes agreed to with South Korea.

Additionally, with the agreement to renegotiate the KORUS FTA, the United States threat to withdraw from the agreement should further recede into the background. At today’s Senate Finance Committee confirmation hearing, Jeffrey Gerrish, nominee for Deputy USTR for Asia, and Gregory Doud, nominee for Chief Agriculture Negotiator, both noted that the administration should do no harm to existing FTAs. But the threat could still resurface as in the NAFTA talks where President Trump mused after renegotiations began that he could still decide to withdraw from NAFTA. So, the prospect that the issue of withdrawing from KORUS could return at a future date.

However, the current security situation makes it imperative that the talks proceed smoothly and that the threat of withdraw is removed from the equation. As North Korea moves closer to completing its nuclear and missile programs, it will be increasingly important for the United States and South Korea to maintain close policy coordination and avoid issues that could create tensions in the alliance at a critical stage.

An improved KORUS FTA has the potential to benefit both the United States and South Korea. In the area of digital trade, well-known companies such as Facebook and Youtube were only just establishing themselves and updating the agreement to reflect modern trade patterns should be mutually beneficial. The key is to find ways to enhance the agreement rather and avoid disputes that create tensions in the alliance.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Natig Sharifov’s photostream on flickr Creative Commons.

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South Korean President Moon Jae-In and French President Charles de Gaulle, both 360 presidents

Les Présidents: Moon Jae-in, Charles de Gaulle, and the 360 Presidency

By Mark Tokola

Historical analogies are fraught. Things never happen exactly the same way twice, and assuming they do can be misleading.  Nevertheless, historical parallels can offer useful perspectives.  For example, an advisor to South Korean President Moon Jae-in who recently visited Washington remarked that one element of President Moon’s philosophy for South Korea was a “360 degree defense.”  This sounds commonsensical; nations prudently should be prepared to defend themselves against potential threats coming from any direction.  But, for those old enough to remember, it also pushed the memory button of French President Charles de Gaulle’s January 1968 announcement that France would pursue a policy of “defense tous azimuts,” or all-around defense. The parallels between Moon Jae-in and Charles de Gaulle do not stop there.

Charles de Gaulle always had an uneasy relationship with the United States. On one hand, President de Gaulle withdrew France from NATO and obstructed European integration.  On the other, he was the U.S.’ strongest ally during the Cuban Missile Crisis, accurately predicted German unification and the fall of the Soviet Union, and presided over an unparalleled period of French economic growth.  Presidents Kennedy and Nixon both held de Gaulle in high regard.  He has topped polls as “the greatest Frenchman of all time.”  (One assumes Napoleon did not earn the accolade because of being dictatorial and, in the end, losing.)  The lesson of the comparison between de Gaulle and Moon may be that it is possible, perhaps even advantageous, for the United States to have an ally with which it sometimes disagrees.

One contextual parallel between the two presidents is that Moon and de Gaulle both came to power following a domestic political crisis. The collapse of the ineffective French Fourth Republic in 1958 was followed by the de Gaulle presidency and the founding of the Fifth Republic.  Charles de Gaulle promised, and delivered, constitutional reforms which have endured.  Moon Jae-in similarly has taken power following a crisis of governance and has promised constitutional reform.

Charles de Gaulle generally is perceived as a conservative, but on the economic front he favored state intervention in the economy, including a move to rein in the largest French companies by requiring that they share profits with their workers.  By 1964, France had overtaken the UK economically for the first time in modern history.  In a similar vein, Moon Jae-in has promised government action to boost economic performance, and his attitude toward Korea’s largest corporations, like de Gaulle’s, is that they should contribute more to the well-being of the citizenry.

But it is in the foreign policy arena that the comparison might be most instructive.  De Gaulle believed that the Soviet Union posed a threat to Europe, but also believed that it was necessary to engage with the Soviets as well.  He traveled to the Soviet Union in 1964 in an early attempt at détente, all the while believing that the Soviet system had no future.  De Gaulle did not have complete faith in what he considered a weakening American extended nuclear deterrence, and eventually concluded that France needed an independent nuclear arsenal with which it could defend itself.  De Gaulle chose to balance France’s U.S.- and UK-oriented Atlanticism with a European “Continentalism” that he defined as stretching from the Atlantic to the Urals.  He sought the closest possible ties with France’s old enemy, Germany, and held out the possibility of cooperation with Russia (de Gaulle never called it “the Soviet Union”).

It appears that Moon Jae-in has a similar instinct towards broadening the foundation of South Korea’s foreign policy stance.  He favors an enduring, close relationship with the United States, but also believes that South Korea could simultaneously have a positive relationship with China in a more closely integrated Asia, balancing a continuing U.S. Pacific-orientation with a new Asian “Continentalism” among countries of the region.  Continuing the parallel between the two presidents, Moon may view Japan with the same skepticism with which de Gaulle viewed the U.K., cooperating when in both countries’ interests but watching it with a wary eye. Though he doesn’t share de Gaulle’s uncertainty about the U.S. nuclear umbrella.

De Gaulle’s assertiveness in promoting what he perceived as France’s national interest sometimes strengthened and sometimes undermined American diplomacy. But, taking the long view, it also demonstrated that countries that share basic values regarding democracy, free markets, and human rights generally will support each other’s strategic direction and foreign policy interests — even if they disagree from time to time on specific policies.  Similarly, the U.S. government may not always agree with President Moon’s perception of South Korea’s national foreign policy interests.  This may not lead to the most comfortable kind of alliance, but it is still one that can endure, even beyond the temporary issues raised by North Korea.  It is worth recalling that throughout their long and sometimes awkward history, the United States has never been at war with France or with South Korea, a rare distinction.

Mark Tokola is the Vice President of the Korea Economic Institute of America. The views expressed here are his own.

Images from wikicommons and arif_shamin’s photostream on flickr Creative Commons.

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No Reason to Withdraw from the KORUS FTA

By Phil Eskeland

Rumors flooded Washington over the Labor Day holiday weekend that the U.S. would soon withdraw from the Korea-U.S. Free Trade Agreement (KORUS FTA).  When President Donald Trump visited hurricane-damaged Houston, Texas on Saturday, he was asked by reporters about this development and responded that he would discuss the fate of KORUS with his advisers this week.

The White House may have delayed a decision on withdrawal from the agreement until the publication of the most updated monthly trade statistical information from the Foreign Trade Division of the U.S. Census Bureau at the Department of Commerce.  Earlier this morning, this data was released to reveal two interesting points.

First, while U.S. exports of merchandise goods to the Republic of Korea (ROK) in July fell by a modest 3.7 percent as compared to June, the level was 16 percent higher than July 2016.   As a result, the Year to Date (YTD) merchandise trade deficit between the U.S. and South Korea still remains well below last year’s level.  Thus far, the YTD (January – July) merchandise trade deficit between the U.S. and South Korea is $13.1 billion (vs. $18.8 billion in 2016), representing a 30 percent decrease.  If present trends continue, the trade imbalance in goods alone would drop below $20 billion for 2017.

Second, when adding in trade in services, the latest release illustrates a more complete picture.   As part of this morning’s release, 2017 2nd Quarter services data was also made public.  Once again, it shows a modest, but steady increase in U.S. services exports to Korea during the previous four quarters.  As a result, the YTD (January – June, 2017) bilateral trade imbalance of both goods and services between the U.S. and the ROK showed a decline of 50 percent (or half) when compared against a similar time period in 2016.

For the 1st and 2nd Quarters in 2016, the bilateral U.S.-ROK trade deficit of goods and services was $10.6 billion.  However, for the 1st and 2nd Quarters in 2017, the good and services trade deficit between the U.S. and South Korea dropped to just $5.25 billion, in part, because of the amazingly low goods and services deficit level of $1.5 billion for the 2nd Quarter (April – June) 2017.

For all of 2016, the U.S.-South Korea goods and services trade imbalance was $17.6 billion, representing one of the smaller deficits with any of America’s major trading partners.  If this trend continues, the U.S.-ROK combined goods and services trade deficit could be $9 billion or less for 2017, which represents near balance.

Now is exactly the wrong time to terminate the KORUS FTA.  Various tariff and non-tariff barriers to U.S. products would go up reversing the recent, hard-won progress made to lowering the trade imbalance between the U.S. and South Korea, which is one of the main goals of President Trump.  If improvements can be made to the agreement to further open markets, U.S. and Korean negotiators should take advantage of the opportunity to lock in these revisions irrespective of the possible effect on the trade imbalance.  However, a whole-scale rejection of the agreement would be unwise and counterproductive to advancing the goals of creating more prospects for U.S. exporters to sell in South Korea because tariffs (or import taxes) would snap-back to higher, pre-KORUS FTA levels, making U.S. products more expensive in Korea, particularly in relation to other foreign competitors that have a FTA with the ROK.

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own.

Photo from Diego Cambiaso’s photostream on flickr Creative Commons.

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What Do the Trump Administration’s NAFTA Objectives Mean for the KORUS FTA?

By Kyle Ferrier

Last week, the Office of the U.S. Trade Representative (USTR) released its Summary of Objectives for the NAFTA Renegotiation, providing a window into how the administration may pursue updating the U.S.-Korea Free Trade Agreement (KORUS FTA). Because USTR is taking a different approach on the North American Free Trade Agreement (NAFTA) than on KORUS, calling a special Joint Committee meeting under KORUS rules rather than formally triggering the renegotiation process, it is not required to release a similar document outlining negotiation objectives with Korea. Yet, the administration’s regular singling out of both trade deals and characterization of each set of new talks suggests USTR may have similar objectives on both. What then does the summary of objectives for NAFTA portend for KORUS?

The biggest takeaway is that the proposed changes are not as extensive as the administration’s rhetoric on trade would suggest. Although Donald Trump lambasted the Trans-Pacific Partnership (TPP) on the campaign trail and withdrew the U.S. from the deal on his third day in office, most of what USTR is looking to include in an updated NAFTA is either drawn directly from the TPP or generally congruent with the agreement. As such, Seoul should view renewed talks as an opportunity to update KORUS.

Apart from newer amendments on automobiles and beef, KORUS is 10 years old. Some chapters may be in more need of an update than others, particularly e-commerce, though both countries could benefit from revisiting all chapters to reflect more advanced rules. Mexico and Canada essentially went through this process with the U.S. for the TPP negotiations and will have to run the gamut again through the much older NAFTA, turning 23 this year. While Korea may not have been party to the TPP, in many ways KORUS was the foundation for the TPP and it has long been an observer of the deal. Seoul is well-acquainted with TPP rules and the domestic adjustments required to meet their stipulations, which should greatly facilitate discussions on KORUS.

In addition to upgrading the existing chapters, renewed talks could bring new chapters from the TPP to KORUS. The USTR document on NAFTA has separate sections on state-owned and controlled enterprises (SOEs), small- and medium-sized enterprises (SMEs), and good regulatory practices, all of which appeared as individual chapters for the first time in an FTA in the TPP. All three have potential benefits for the Korean economy, especially the SME chapter which seeks to make exporting easier for small companies, a perennial government priority. However, a currency chapter as suggested in the USTR document could be a sticking point.

Although the possible inclusion of currency manipulation provisions may be of concern to Seoul, the Trump administration is not likely to entirely give up on the issue. Addressing Washington’s concerns bilaterally through KORUS may even be a more acceptable venue. Korea is on the U.S. Treasury’s Monitoring List for currency manipulation, meeting two of the three thresholds of a manipulator. Trump’s threats to name China a currency manipulator earlier this year raised concerns that Treasury would alter its criteria, possibly naming Korea a manipulator in the process. Yet in its April report, Treasury largely followed the same methodology as was in previous reports and did not name any manipulators. Nevertheless, there is no guarantee that the next report due out in October would maintain the same criteria, particularly as Trump publicly tied not naming China a manipulator to its help with North Korea, which he seemingly no longer views as a viable policy option.

The USTR objective on currency in the NAFTA document does not offer any specifics, only suggesting that exchange rate manipulation would be avoided “through an appropriate mechanism.” However, if this section were to also follow the precedent set by TPP, USTR will likely ask Seoul to be more transparent in its official currency market interventions, an issue that has been repeatedly raised in Treasury’s international currency reports to Congress. In a 2015 Joint Declaration, TPP countries committed to avoiding currency manipulation as well as publicly reporting their foreign-exchange interventions. As public reporting of foreign-exchange interventions relates to the only Treasury criteria that Korea does not meet (i.e. repeated net purchases of foreign currency more than 2 percent of GDP over the previous 12 months), it may be in Korea’s best interest to be more transparent regardless of this issue arising in trade talks with the United States. Additionally, through KORUS talks, addressing currency manipulation and other contentious issues that might have made Korea hesitant to join the TPP could even help facilitate its accession to the agreement, for which there are convincing arguments.

Although USTR’s objectives for NAFTA largely suggest that the Joint Committee meeting will be used as an opportunity to update KORUS based on free trade principles, Korea should be cautious as well.  Of high concern for Canada and Mexico is USTR’s objective to eliminate the Chapter 19 dispute settlement mechanism for trade remedies as well as eliminate the global safeguard exclusion for NAFTA countries outlined in Article 802. This would make it easier for the U.S. to apply more anti-dumping and countervailing duty measures against both countries and simultaneously more difficult for them to contest these measures. While there is no global safeguard exclusion in KORUS (Article 10.5 says imports “may” be excluded rather than “shall” in Article 802) nor does it go as far as NAFTA on dispute settlement (Article 10.7 does not create binational panels to resolve disputes as does Chapter 19), some are worried these specific objectives are how the Trump administration plans to advance protectionism. Others also expressed concern over the first objective, which states “Improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries,” as a possible avenue to implement managed trade rather than free trade.

Though it is too early to definitively gauge how Joint Committee talks will proceed, there is reason enough for Korea to be cautiously optimistic about U.S. negotiating goals. Yet, Seoul would be wise to closely follow the NAFTA renegotiation, giving special attention to areas with the potential to promote protectionism and managed trade.

Kyle Ferrier is the Director of Academic Affairs and Research at the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Image from Michael Vadon’s photostream on flickr Creative Commons.

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Since Trump’s Election, the U.S.-Korea Trade Deficit Has Been Reduced by One-Third

By Phil Eskeland 

Last March, President Donald Trump directed the Department of Commerce and the Office of the U.S. Trade Representative (USTR) to prepare an Omnibus Report on Significant Trade Deficits within 90 days.  South Korea has been identified as a country that would be included in this report based on 2016 data that shows U.S. goods exports to Korea declined and the trade deficit has grown since the implementation of the Korea-U.S. Free Trade Agreement (KORUS FTA).  While awaiting completion of the report, USTR also issued a letter to Korea asking for a special meeting of the Joint Committee to discuss possible amendments and modifications to the KORUS FTA to address the “significant trade imbalance” between the U.S. and the Republic of Korea.   However, both efforts use outdated statistics with respect to the latest data in the U.S.-Korea trade relationship.

Since President Trump was elected in November, the monthly bilateral merchandise trade imbalance between the U.S. and South Korea has been less that the previous year.  Thus, the six month (December through May) cumulative goods deficit has been cut by more than one-third (or 34 percent) as compared to same six-month time period from the previous year.  One reason for this reduction is that for the months of December, March, April, and May, the U.S. has hit repeated record levels of merchandise exports to Korea – $4.27 billion in December, $4.36 billion in March, $4.43 billion in April, and $4.5 billion in May.  While trade statistics are not available from the U.S. government yet for the month of June, the Korea International Trade Association (KITA) reported that South Korea imported a record $4.8 billion in goods from the United States in June, resulting in yet another month in which the bilateral merchandise trade deficit was significantly less than last year’s level.

Trade Data 7.2017-02

This trend is even more pronounced when you include services trade.   Comparing the combined trade imbalance statistic of the 4th Quarter 2015 and 1st Quarter 2016 with the 4th Quarter 2016 and 1st Quarter 2017[1] (in other words, since Trump’s nomination for president), the trade deficit in both goods and services between the U.S. and the ROK dropped by 37 percent.

Trade Data 7.2017-01

This updated information should be incorporated in any analysis of the bilateral trade deficit and as part of any administration strategy to reduce the trade imbalance between the U.S. and South Korea.  It appears that the free market and the KORUS FTA is already working to accomplish the Trump Administration’s goal with respect to lowering the trade deficit between the two countries.

[1] 2nd Quarter 2017 data on trade in services will not be made available until early September.

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own.
Image from Tom Driggers’ photostream on flickr Creative Commons.      

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U.S. Forces in South Korea Open Their New Headquarters

By Seung Hwan Chung

The U.S. Eighth Army, the main symbol of U.S. Forces Korea (USFK), transferred its headquarters from Yongsan base in central Seoul to Camp Humphreys in Pyeongtaek on July 11. Located 40 miles south of Seoul, Camp Humphreys is the center of the largest construction and transformation project in the U.S. Department of Defense’s history. Moreover, the new headquarters represents the end of the Eighth Army’s 64-year presence in Seoul.

USFK has been expanding Camp Humphreys under a deal with the South Korean government. Both governments agreed to consolidate USFK through two plans: the Yongsan Relocation Plan (YRP) and the Land Partnership Plan (LPP). The YRP is the relocation of the Yongsan Garrison to Pyeongtaek, while the LPP will consolidate the 2nd Infantry Division from north of Seoul to Pyeongtaek.

Camp Humphreys has been transformed into a new base equipped with up-to-date facilities. Construction projects include unit headquarters buildings, vehicle maintenance facilities, barracks, family housing, medical facilities, a military communications complex, a commissary, a post office, schools, and child development centers. It is estimated that over 42,700 soldiers, civilians, and their family members will move to Camp Humphreys by 2020. There are 28,500 U.S. troops located in South Korea.

Lt. Gen. Thomas S. Vandal, Commander of the Eight Army said, “The $10.7 billion dollar project increased the size of U.S. Army Garrison Humphreys, making it the largest U.S. Army garrison overseas in the Department of Defense.”

Not all of USFK is moving, however. Combined Forces Command is expected to maintain its location at Yongsan, and the 210th Field Artillery Brigade will remain near the DMZ. In addition, a joint U.S.-South Korean unit will continue to provide security for the Joint Security Area (JSA). Troops will also make the commute to training ranges, which are located near the border. The Brian Allgood Community Hospital will also remain at Yongsan until the new building is completed at Camp Humphreys.

Vandal emphasized the new base will provide increased security benefits by consolidating units, noting that the U.S. military will no longer have to defend 173 camps and installations scattered nationwide. By moving south of Seoul, the U.S. Army will improve its readiness and effectiveness. Camp Humphreys will facilitate the transformation of the ROK-U.S. alliance. It will also enhance our deterrence against North Korea.

The history of Camp Humphreys goes back to 1919 when the Japanese Military built Pyeongtaek Airfield during its occupation of Korea. During the Korean War, the name was changed to K-6. In 1962, the base was renamed Camp Humphreys in honor of Chief Warrant Officer Benjamin K. Humphreys, a pilot assigned to the 6th Transportation Company. In addition to its airfield, several U.S. Army units are located in Camp Humphreys, including the 2nd Combat Aviation Brigade, elements of the 1st Signal Brigade, the 501st Military Intelligence Brigade, the 65th Medical Brigade, as well as other military units and commands.

The U.S. Eighth Army was activated in Memphis, Tennessee, in 1944. During World War II, it fought in the Pacific Theater of Operations as a field army. With the surrender of the Japanese Empire on 15 August 1945, the Eighth Army led the Army of Occupation in Japan. During the Korean War, the Eighth army served as both a field army and theater army. Since the armistice, it has assisted South Korea, both in rehabilitation efforts after the war and upholding common defense. The Eighth Army has changed from its previous role as an Army Service Component Command to a headquarters that commands and controls the war-fighting South Korea-U.S. Combined Joint Task Force, serving as the Korea Theater of Operations Army Forces command.

Seung Hwan Chung is a reporter with the Maeil Business Newspaper and a visiting fellow with the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Photo from Expert Infantry’s photostream on flickr Creative Commons.

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What Does the Call for a KORUS FTA Special Meeting Mean for Korea?

By Phil Eskeland

On July 12, 2017, Ambassador Robert Lighthizer of the Office of the U.S. Trade Representative (USTR) sent a letter to Minister Joo Huynghwan of the Ministry of Trade, Industry and Energy of the Republic of Korea (ROK) requesting the convening of a special session of the Joint Committee as provided for in the Korea-U.S. Free Trade Agreement (KORUS FTA) to discuss possible revisions to the agreement.  Specifically, the letter conveys the desire on behalf of the Trump Administration to “review progress on the implementation of the Agreement, resolve several problems regarding market access in Korea for U.S. exports, and, most importantly, address our significant trade imbalance.”

First, it is important to note that this request is a far cry from threats to terminate the KORUS FTA.  Nonetheless, this action should not be unexpected in light of past campaign rhetoric by President Donald Trump, but represents a prospect to possibly make amendments and modifications to the base text of the agreement.

This meeting can be an opportunity for both South Korea and the United States to update and modernize this 10-year old agreement.  There have been many changes in the global economy since KORUS FTA negotiations concluded in 2007, particularly in the field of digital trade.  Korea could offer specific changes to policies that have hindered full and open access to U.S. exporters, such as recognition of U.S. automobile safety standards.  On the flip-side, Korea should not be reticent in asking for changes in U.S. policies that have hampered Korean exports to the United States.

However, it is disappointing to see the use of just one set of trade statistics by the Trump Administration without incorporating other factors, such as trade in services data that continues to produce record surpluses for the U.S., that form a more complete and accurate economic picture as it relates to Korea.  The merchandise trade deficit issue serves as an unfortunate scapegoat for economic stagnation in many parts of the United States that has other causes.

Nevertheless, when examining the totality of trade between the U.S. and Korea in both goods and services, the KORUS FTA has been a success because:

  1. Total U.S. exports to Korea grew (not declined) by $2 billion between 2011 and 2016; and
  2. The total U.S. trade deficit in goods and services with Korea is ranked well below other nations, including Italy (see chart below).  Far from being a significant contributor to America’s trade imbalance, Korea’s portion is only 2.9 percent of the total U.S. trade deficit with countries of the world that export more to the U.S. than they import from us.

2017 KORUS Pie Chart

In addition, the independent U.S. International Trade Commission (USITC) concluded last year that the KORUS FTA improved the U.S.-Korea merchandise trade imbalance in America’s favor by $15.8 billion.  In other words, the bilateral trade imbalance between the U.S. and Korea would have been much higher absent the KORUS FTA because U.S. exports of items that were covered by the agreement have dramatically increased since implementation.  Just ask the U.S. agricultural community about the growth of U.S. exports of beef, cherries, blueberries, lobsters, almonds, and a host of other American agrarian products to Korea regarding the positive impact of the KORUS FTA.  Many of these rural farming and ranching communities are located in counties and states that voted for Donald Trump.

In fact, the most recent trade statistics from the U.S. Department of Commerce continue to show the U.S. exporting a record level of goods across-the-board to Korea since the beginning of the year.  During May, 2017, (the latest data available), the U.S. sold nearly $4.5 billion worth of goods to Korea – the highest monthly level in the history of U.S.-Korea trade relations.  This has helped to produce a 33 percent reduction in the bilateral trade imbalance thus far this year, in comparison to 2016 levels, continuing a declining trend in the U.S.-Korea trade deficit that started mid-last year, well before the U.S. presidential election.

In short, the free market and the KORUS FTA is working on its own accord to resolve the Trump Administration’s concern about the merchandise trade imbalance with Korea.   If present trends continue, the U.S. may experience a lower bilateral merchandise trade deficit with Korea in 2017 than we have seen for the past several years – all without any action by USTR.

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own.

Photo from National Ocean Service’s photostream on flickr Creative Commons.      

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A Conversation with Charlie Rangel, Former Congressman and Korean War Veteran

KEI President Donald Manzullo, a former member of the House of Representatives, recently interviewed Charlie Rangel, a former Congressman from New York and a Korean War Veteran, for the KEI podcast. Rangel was one of three current and former members of Congress who KEI recently honored for their service in the Korean War. The two former members discussed Rangel’s experiences during the war, his journey after returning from Korea, and his time in Congress.

The following is a partial transcript of that conversation. The rest of the episode can be found here.

Donald Manzullo: Charlie, we thank you for your service. You wrote a book called “And I Haven’t Had a Bad Day Since,” after the battle of Kunu-Ri – tell us about that battle.

Charlie Rangel: We got to Korea in August of 1950, and one way or another fought our way up past Pyongyang, and the Yalu River separated North Korea from Manchuria. General MacArthur had actually cut off the North Koreans, victory was ours, home was in our minds, and in September, October we were waiting to be home for Thanksgiving and Christmas. We waited September, we waited October, we waited November. The weather changed, our clothes didn’t. We were just waiting for that ship to call, to get there.

And we had heard that one of our guys … was captured by the Chinese. I started a rumor, it never entered my mind that there were really Chinese there. And for three days the entire 8th Army, including my outfit – the Chinese had crossed the Yalu River, they were talking to us with loudspeakers in broken English, telling us to surrender. Don, it was a nightmare, the trumpets would be blowing … and at nighttime, they would start their blasts.

That very day all hell broke loose, as tens of thousands of Chinese surrounded us and international troops, the screaming, the yelling, the killing. And I don’t know, I got shot and I got out of there. And like I said, I haven’t had a bad day since because so many … we had 90 percent casualties between those that were captured, killed, wounded.

And in telling this story, I just can’t see how I could be in love with anything that sounds like Korea except the Korea that’s there now. To believe that I had any part of creating a miracle for people I never knew, never heard of, a country I never thought was there – it makes me proud to be an American, and even prouder to see human beings like South Koreans who can come out of the ashes and become a world power economically.

Donald Manzullo: Charlie, your modesty – it’s always been a part of your life, even though you were one of the flashiest dressers in Congress. But during your time in Korea, you earned a Purple Heart, Bronze Star, Presidential Unit Citation, Republic of Korea Presidential Unit Citation, and three Battle Stars …. Your personal life is absolutely fascinating. Former Congressman, but you’re always a Congressman, high school dropout enrolls in the Army, goes to Korea, comes back home, trying to figure out what to do. The next thing you do is you go back and get your GED. Tell us about the march from the GED to the halls of Congress, Charlie.

Charlie Rangel: I never knew just how ignorant I was until I came out of the Army. I thought a couple of stripes made the difference the same way people get a couple of degrees. When I came out of the Army with all these medals you mentioned, pocket full of money, starched uniform, a couple of stripes, I must have felt like I was 10 feet tall until I went to get a job. They asked what could I do and I start talking about the M1 rife, the automatic carbine…and they said “next.” I was crushed.

And my brother was older, smarter, and so encouraging. He kept me from re-enlisting in the Army, which is what I was going to do. He got me a job at the garment center. I don’t know whether in your part of the country if you have hand trucks – two wheels, carry loads. And I’m carrying a load of lace – wasn’t heavy, just awkward – in the rain, and it slipped out of my hand in Manhattan in the rain, and cop’s cursing me out for blocking the traffic … I went straight to the VA, I told them “I don’t know what the hell’s going on, but I know I need some help.”

And I didn’t know how much help I really needed, I hadn’t completed high school. And the only reason I said I wanted to become a lawyer, which everyone thought was impossible, was because of my grandfather. I wanted to impress him, he was an elevator operator at the criminal court building of New York. He liked me, but he loved judges, he loved lawyers, and he loved the court system.

And I don’t know who laughed the loudest, the people at the Veterans Administration or my grandfather. But somehow we were able to work it out and I became an assistant U.S. attorney. And I got married to the most wonderful, understanding woman in the world – she had finished college while I was in high school.

Donald Manzullo: Well Charlie, I want to thank you for spending the day with us, for talking about old times.

Charlie Rangel: Well let me thank you Don. Like I said, Korea is a small country geographically, but it’s a country with a big, big heart in terms of giving hope to so many people whose countries historically have lived in poverty and never gotten out of it.

Image from KEI’s reception honoring Korean War Veterans in Congress. You can view the video of the event here

 

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The Son of Refugees who Became President of the Republic of Korea Visits D.C.

By Seung Hwan Chung

On December 19 1950, the SS Meredith Victory, a 7,600-ton merchant marine vessel, was about to leave from the North Korean port city of Hungnam. Hundreds of thousands of refugees flocked to the pier at Hungnam as the bombing of the Chinese army came closer. Leonard Larue, a U.S. Navy captain, made the decision to abandon almost all of the arms and military supplies from the ship and took on 14,000 evacuees in an operation code-named “Christmas Cargo.”

The parents of Moon Jae-in and his older sister were among the 14,000 refugees who fled aboard the Meredith Victory, arriving on Geoje Island in Gyeongsang Province on Christmas Eve. Moon Jae-in was born two years later on Geoje Island in January 1953. Thus, the son of a refugee from Hungnam became the 19th President of the Republic of Korea thanks to this successful rescue operation called the Hungnam Evacuation, which is credited by the Guinness Book of World Records as the largest transportation of evacuees in history.

In the lead-up to the evacuation, the 3rd U.S. Division was advancing northward from Wonsan to assist UN and South Korean forces trapped near the Chosin Reservoir. After losing Wonsan, the 10th U.S. Army Corps and the 1st Korean Army Corps had to withdraw to the sea as their retreat path was blocked, leading them to the port city of Hungnam. The first unit that withdrew from Hungnam was the 3rd Korean Division, followed by the 1st U.S. Marine Division.

According to the Korean Ministry of Patriots & Veterans Affairs, the Battle of the Chosin Reservoir is recorded as among the most brutal battles in the history of the U.S. Marine Corps. During the Battle, 15,000 U.S. marines fought through 120,000 Chinese soldiers in the extreme winter cold of -22 to -40 degrees Fahrenheit. As a result, 4,500 U.S. marines died and 7,500 were wounded.

President Moon Jae-in remarked on his family’s story at a reception for Korean War Veterans on  June 23, 2017, saying, “Today we are joined by the heroes of the Battle of Chosin Reservoir and the Hungnam Evacuation from North Korea. These two historic occasions became well known even to postwar generations in Korea who did not experience the war. The son of a refugee from Hungnam could become the President of the Republic of Korea and join you all today. I hope this fact helps make the Korean War veterans of the U.N. Forces feel a sense of delight and reward.”

President Moon Jae-in is scheduled to make a visit to Washington D.C. from June 28 to July 1 for his first summit meeting with U.S. President Donald Trump. As his first stop in the United States, he visited the new memorial for the Battle of the Chosin Reservoir at the National Museum of the Marine Corps in Quantico, Virginia on June 28. There, Mr. Moon laid a wreath before the memorial that commemorates the Korean War battle which enabled the evacuation of civilians.

The “Star of Koto-ri,” a symbol of the battle, is on the top of the monument. U.S. Marines started to wear the star to commemorate the bright stars they saw after a snowstorm before succeeding in the evacuation.

President Moon will also visit the Korean War Veterans Memorial in Washington D.C. along with Vice President Mike Pence, whose father was a Korean War veteran who was awarded a Bronze Star Medal for his service.

Additionally, Foreign Minister Kang Kyung-wha remarked on the Hungnam Evacuation during her visit to the U.S. 2nd infantry division base in Gyeonggi Province, stating “President Moon will invite Korean War veterans who participated in the Hungnam Evacuation” to the White House during the summit.

President Moon’s visit to the United States will lay the foundation for further upgrading South Korea-U.S. relations. The fact that the new Korean president is highlighting his family history and making a point to thank Korean War veterans throughout the trip can make the summit even more meaningful. Through the visit, the two heads of state can share a vision for further developing the Korea-U.S. alliance into an even greater one.

Seung Hwan Chung is a reporter with the Maeil Business Newspaper and a visiting fellow with the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Image from USMC Archives’ photostream on flickr Creative Commons.

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The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.