(Marcus Noland – Peterson Institute for International Economics)
The last time I checked in on Donald Trump, he was threatening to inflict on China “a depression the likes of which you have never seen” if it didn’t bring North Korea to heel. I had thought that the Donald was content with blocking future trade deals like the Trans-Pacific Partnership, but apparently not: in an interview last week, one of his top advisors signaled that he is ready to abrogate all existing US free trade agreements.
In an interview with Yonhap, Walid Phares, who Trump identified as one of his five foreign policy advisors, stated that Trump may wish to “go back to ground zero” on all FTAs (link is external) the U.S. has signed so far, including the Korea-U.S. (KORUS) FTA. The problem is that one cannot renegotiate these agreements on the fly: technically such renegotiations must be preceded by a 180-day notice of termination after which new negotiations can start.
I suppose that a Trump Administration could try to circumvent this requirement by requesting “informal” consultations, on the expectation that its trade partners, in this instance, South Korea, would not call its bluff. But this is a dangerous game. And if the US and its partners, including South Korea, proceeded to formal renegotiations, there is no guarantee that they would reach a new agreement, or that a new agreement would be ratified by the relevant legislatures. It goes without saying that it took four years to get the existing KORUS agreement through the US Congress. Click here to read more.