The US Trade Representative said Wednesday the free trade agreement with South Korea resulted in a "dramatic increase in our trade deficit," stressing it's time for a major review of how the US approaches trade deals.
"The largest trade deal implemented during the Obama administration -- our free trade agreement with South Korea -- has coincided with a dramatic increase in our trade deficit with that country," USTR said in President Donald Trump's 2017 Trade Policy Agenda.
Compared with before the deal went into effect in 2012, the total value of US goods exported to South Korea fell by $1.2 billion, while US imports of goods from South Korea grew by more than $13 billion, USTR said.
"As a result, our trade deficit in goods with South Korea more than doubled," it said. "Needless to say, this is not the outcome the American people expected from that agreement. Plainly, the time has come for a major review of how we approach trade agreements."
The report is seen as a strong indication that the US could seek a renegotiation of the pact.
The USTR also said the US has run more than $74 trillion in trade deficits in goods under the North American Free Trade Agreement, and former President Barack Obama had also called for renegotiating the agreement or a withdrawal from it if such renegotiations were unsuccessful.
"For decades now, the United States has signed one major trade deal after another and, as shown above, the results have often not lived up to expectations. The Trump Administration believes in free and fair trade, and we are looking forward to developing deeper trading relationships with international partners who share that belief," USTR said.
"But, going forward, we will tend to focus on bilateral negotiations, we will hold our trading partners to higher standards of fairness, and we will not hesitate to use all possible legal measures in response to trading partners that continue to engage in unfair activities," it said.
During the campaign, Trump blamed free trade deals for job losses and other American economic problems in an attempt to woo voters struggling with economic difficulties. Since taking office, Trump also made protection of American workers and companies from foreign competitors his No. 1 priority.
After taking office, Trump withdrew the US from the 12-nation free trade deal Trans Pacific Partnership and has stepped up attacks on NAFTA, spurring concern that his next target could be the pact with Korea that he denounced as a job-killing deal during the campaign.
The White House also said last month that the Trump administration will review all trade pacts.
The Korea deal, which went into effect in 2012 after many years of tough negotiations, has been viewed as a symbol of the economic alliance between the two countries. Attempts to revise or renegotiate the agreement could set off diplomatic tensions.
Trump claimed during the campaign that the pact ended up increasing US imports from the South while failing to increase exports. But experts say the US has enjoyed surpluses in services trade under the deal, and US deficits in goods trade would have been larger had it not been for the pact.
The US International Trade Commission said in a report last year that it has been good for American interests, saying the agreement is estimated to have improved bilateral merchandise trade balances by $15.8 billion in 2015.
Tami Overby, senior vice president for Asia at the US Chamber of Commerce, also defended the Korea deal, saying the US business community believes that the pact is a gold standard agreement and the highest free trade agreement America has in force today. (Yonhap)