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The Trump administration is turning to allies in Asia and Europe for trade deals as relations with China deteriorate and the world's two largest economies trade tariffs that threaten to hurt global trade.
President Trump signed a revised free trade agreement with South Korea on Monday as he stepped up his efforts this week to show he can enter into new market opening arrangements and is not not hostile to trade. Trump also hopes, on Wednesday, to persuade Japan to begin formal bilateral trade talks, as part of a trade diplomacy effort launched this week by the president and his advisers on the sidelines of UN meetings in New York.
Trump assistants have also scheduled meetings with their counterparts in the European Union to advance a business expansion framework unveiled in July.
"In addition to this agreement, we have many other ongoing transactions – reciprocal agreements," Trump said in signing the Korea Pact.
Movements come as Mr. Trump steps up his trade fight against China, with the entry into force of new 10% taxes on Chinese exports of $ 200 billion Monday. Beijing retaliated with tariffs on $ 60 billion worth of US-made products. US authorities are expected to consider imposing $ 267 billion more on Chinese products, covering virtually all Chinese products sold in the United States.
This week's efforts also coincide with what appears to be a difficult period in Trump's efforts to rewrite the North American Free Trade Agreement. The administration urged Canada to join the new NAFTA framework established last month between the United States and Mexico on September 30. But talks with Ottawa broke down last week with no resolution on a number of blocking points. No new high-level negotiations were scheduled for Monday afternoon.
Trump took office last year, promising to shake up the global free trade system. It did so in many ways, with a wide range of tariffs imposed not only on China but on its allies around the world and threats to tear apart existing trade agreements and withdraw from the World Trade Organization. trade.
But he faced a reaction from US companies and farmer groups worried about the costs to consumers and exporters, as well as legislators from his Republican party facing tough legislative elections in November.
The White House has countered these concerns by insisting that Mr. Trump's goal is to preserve and expand trade, not to contract, but in terms he sees as more equitable for the United States.
The Korean agreement is his first concrete effort. Speaking before the signing, Trump told reporters that the new deal was "coming soon," calling it a "basic overhaul" of the old deal. He described the original agreement as "a very unfair deal for the United States".
South Korean President Moon Jae-in praised the pact, saying the uncertainty surrounding the deal had been eliminated.
However, as a first indication of the administration's policy, the deal suggests that Mr. Trump is ready to accept more modest changes than his public demands imply, at least with trading partners outside China.
"The changes made are significant but modest," said Wendy Cutler, who negotiated the original agreement between the United States and Korea, known as Korus, under presidents Bush and Obama. "The president is expecting a lot of the terrible deal and he is going to change it totally and reduce the bilateral trade deficit, but that seems like a fairly traditional agreement," she added. U. Cutler also noted that "Korea has come with its own demands, and the United States has been receptive – the United States has given as well as obtained".
The biggest changes concern the automotive industry. South Korea has agreed to double the number of vehicles that every US manufacturer can sell each year in South Korea – from 25,000 to 50,000 – for US-compliant and non-Korean-compliant cars. And he agreed to let the United States maintain until 2041 a 25% rate on light trucks. Under the original agreement, it was planned to phase it out over the next three years.
Both of these changes will have little immediate impact. None of the big three American automakers had reached half of its quota last year and together they had exported just over 20,000 units to South Korea. Korean car manufacturers currently do not sell vans in the United States. Hyundai Motor Co. has announced plans to start selling a pickup truck in the US market, but has not said whether it will be manufactured in South Korea, Alabama. factory, or elsewhere in North America.
Despite Monday's signing ceremony between President Trump and President Moon Jae-in, it is unclear when the pact will take effect. Even if the agreement does not need congressional ratification in the United States, it must be approved in South Korea. Korean legislators have warned they will not sign without their car manufacturers being spared new restrictions if Trump threatened to impose global car tariffs in the name of national security. This guarantee is not part of the agreement signed on Monday.
The other major commercial interest of Mr. Trump this week is Japan. Before a dinner with Prime Minister Shinzo Abe on Sunday night, the president tweeted that the two leaders would talk about "military and commercial". He added, "We have done a lot to help Japan want more reciprocal relations."
Since the beginning of his administration, Mr. Trump has pushed Mr. Abe to open negotiations on a free trade agreement, like Korus. Abe resisted, trying instead to draw Trump into the 12-nation Trans-Pacific Partnership negotiated by President Obama with both countries. Trump withdrew the United States from the TPP early in his presidency, saying he preferred bilateral trade agreements to multilateral agreements.
Trump's threat to global auto tariffs – announced in May – has put further pressure on Japan, the largest auto exporter in the United States. Many Japanese officials have concluded that gaining protection against these tariffs, say people familiar with the discussions.
Trump's US trade representative Robert Lighthizer and Japan's economy minister Toshimitsu Motegi are due to hold talks in New York on Tuesday. Messrs. Trump and Abe have another meeting scheduled for Wednesday, and may try to announce a new trading framework at the time, said the people.
Japanese officials hope to reach an agreement similar to the one Mr. Trump signed at the White House in July with European Commission President Jean-Claude Juncker – a joint declaration whose main objectives were to reduce trade barriers between two sides, but vague on specific goals and timelines. That was enough for Mr Trump to promise to avoid imposing car rates on European carmakers as long as negotiations were underway.
European negotiations are far from reaching a broad-based free trade agreement and are currently focused on modest measures such as cooperation on regulatory standards. A formal free trade agreement establishes rules governing virtually all trade between two countries. On the other hand, the United States and Europe only talk about specific sectors and practices.
Abe wants to avoid opening the door to full US-Japan free trade, fearing that this will undermine his efforts to advance a regional Asian trade bloc. He has managed to bring the remaining 11 TPP countries together, even after Trump's withdrawal, and member legislatures are currently ratifying the plan.
Mr. Abe is also concerned that Mr. Trump is urging him to offer deeper, politically sensitive concessions to open the Japanese agricultural market that he has not done under the TPP, and to take further steps to limit car exports.
Cecilia Malmström, the main trade manager in Europe, for her part described Monday the United States. the discussions are "sometimes tortuous" but she said they are "moving" towards a "more limited trade deal" and ways to facilitate gas imports from the US and reduce bureaucratic barriers to trade. "Our people are talking to each other. We will have another meeting in November, "said Malmström, who is in New York for the United States and related meetings.
Ms Malmström highlighted one area of progress: joining the US and Japan to revise WTO rules to limit China's reliance on government subsidies and "forced technology transfers" imposed on Western companies. Malmström met on Tuesday with US and Japanese officials to develop WTO proposals to this end.
-Valentina Pop in New York, Kwanwoo Jun in Seoul and Chester Dawson in Detroit.
Write to Jacob M. Schlesinger at [email protected] and Vivian Salama at [email protected]
