Trump Demands `Fair Shake' for U.S. Carmakers in South Korea

(Bloomberg) -- South Korea must give U.S. automakers “a fair shake” to sell more cars there and stop exporting “dumped steel,” President Donald Trump told his counterpart Moon Jae-in during talks at the White House.

After meeting with Moon on Friday, Trump emphasized he’ll press for changes to the current free-trade agreement to reduce the U.S. trade deficit with South Korea. He told reporters he was encouraged by “Moon’s assurances that he will work to create a level playing field” for U.S. exporters.

Tensions with North Korea also figured prominently in the discussions as Trump signaled he would press for a tougher stance after the death of U.S. student Otto Warmbier following his detention in North Korea.

“The era of strategic patience with the North Korean regime has failed,” Trump said, “and frankly that patience is over.”

The initial meeting would probably be seen as a success, said Duyeon Kim, a visiting senior fellow at the Korean Peninsula Future Forum in Seoul. “On the surface it appeared the two presidents had a fairly positive summit without major blunders, but the real work begins now with having to iron out their stark differences and formulate a joint strategy on North Korea and alliance issues, particularly trade,” Kim said.

Moon said he had a “a candid and lengthy conversation” in which Trump “came across as a man of determination.” He said threats from Pyongyang would be met with a “stern response” and North Korean leader Kim Jong Un “should by no means underestimate the firm commitment” of the military alliance between the U.S. and South Korea.

At the same time, he struck a somewhat softer tone in a speech later Friday in which he repeated his hope for talks with Pyongyang -- a stance that potentially puts him at odds with Trump.

“Engaging in dialogue with Chairman Kim Jong Un is also necessary, for he’s the only one who can decide to dismantle North Korea’s nuclear weapons,” Moon told the Center for Strategic and International Studies in Washington.

The South Korean leader didn’t directly address Trump’s complaints about trade in his remarks at the White House or in his speech. In a statement on the presidential office website, Moon’s presidential policy adviser Jang Ha-sung said the two countries did not agree to a renegotiation of the trade deal, known as KORUS. In his meeting with Trump, Moon emphasized the deal is a reciprocal one, Jang said.

Trade Tensions

Trump’s pressure on South Korea on trade comes as the administration is considering whether to take broader action against foreign-made steel. The Commerce Department has been investigating whether imported steel threatens U.S. security under Section 232 of the Trade Expansion Act. 

U.S. automakers’ access to South Korea has been a sore point in trade ties for years. Former President Barack Obama renegotiated the trade deal with South Korea struck by George W. Bush’s administration in part to gain better terms for U.S. automakers. Trump has said that he plans to either renegotiate or scrap KORUS.

The U.S. ran a $27.6 billion trade deficit with South Korea in 2016, according to U.S. Census Bureau data. South Korea imported $1.6 billion in U.S. autos while exporting $16.1 billion in autos to the U.S. that year.

As a presidential candidate, Trump slammed the trade pact with South Korea as a “job-killing” deal.

The two leaders also have sharply different ideas about how best to address the threat from North Korea’s nuclear and ballistic-missile tests.

‘Solid Plan’

“I think we have a very, very strong, solid plan,” Trump said in his second meeting of the morning with Moon, a former human-rights lawyer.

The Trump administration, which has grown increasingly frustrated with provocations from Kim’s regime, announced Thursday it was imposing sanctions on a Chinese bank, a shipping company, and two Chinese citizens to pressure Pyongyang. The penalties include prohibitions that will cut off the Bank of Dandong from the international finance system.

Trump has expressed disappointment that China hasn’t done more to rein in North Korea, which depends on China for most of its trade. Still, Moon’s decision to defer the further deployment of a U.S. missile shield known as Thaad in South Korea did not appear to have been a major topic of his talks with Trump.

"One of the biggest accomplishments for Moon is that he successfully ended any Thaad-related noise,” said Kim Hyun-wook, a professor at the Korea National Diplomatic Academy. “Still, that leaves further homework for Moon as he now has to find a way to counter China’s pressure and retaliation."

China has opposed the deployment of Thaad in South Korea, saying it could pose a threat to its own defenses, and has curtailed tourist visits to South Korea and penalized companies operating in China.

Moon said in his remarks at the CSIS that the damage from China’s retaliation was nearly $8 billion, adding “it’s South Korea’s sovereign decision whether to deploy Thaad or not.”

“It’s not right for China to unduly intervene in South Korea’s sovereign decision,” Moon said. “I do understand China has concerns over our Thaad deployment but I strongly call for China to withdraw its retaliation as it’s not right.”