It looks like the Trump administration will at some point demand a renegotiation of the US-ROK FTA:
The U.S. 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 U.S. 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 U.S. goods exported to South Korea fell by $1.2 billion, while U.S. 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.” [Korea Times]
I think what would be interesting to see is a report on any artificial barriers making it difficult for US companies to compete in South Korea which may contribute to the trade deficit.
I am sure President Trump will be pleased with this news:
LG Electronics’ plans to build a washing machine factory in Tennessee are taking shape as it seeks to sustain growth in the key American market while avoiding punitive protectionist measures from Donald Trump’s administration.
Dan Song, president of LG Electronics’ home appliances business, front left, and Gov. Bill Haslam, front right, sign a memorandum of understanding on Tuesday in Tennessee. LG agreed to build a washing machine factory in the state. In the back row from left are Curtis G. Johnson, a member of the Tennessee House of Representatives; Joo Hyung-hwan, Korean minister of trade, industry and energy; Kim McMillan, mayor of Clarksville; and William Cho, president and CEO of LG Electronics USA. [LG ELECTRONICS]
The company signed a memorandum of understanding with the state government on Tuesday in Tennessee, with the goal of clinching a contract by June and beginning construction by the year’s end. LG will spend $250 million on the project.
The facility, to be built on a 300-acre plot of land in Clarksville, will begin making washing machines for sale in the United States by the first half of 2019 at the earliest, LG said. The plant will be able to produce at least a million units of both front- and top-loading machines a year. The site may later expand to production of other home appliances, the company said. [Joong Ang Ilbo]
You can read more at the link.
It looks like Korean motorists will have a high end electric car choice available to them in May:
Tesla completed the manufacturer registration process to sell cars in Korea on Wednesday, putting it on track to begin operations here within the first half of this year.
“Tesla plans to bring its test product into the country by this month and begin sales in May,” said an official from the Ministry of Land, Infrastructure and Transport, which is in charge of the registration process.
The only step left for the automaker is to report basic specs of the model it plans to sell at least 10 days before sales begin, a relatively simple step compared to previous hurdles. [Joong Ang Ilbo]
You can read more at the link, but South Korea I believe is a perfect market for electric cars considering the short driving distances to get around the country.
For anyone looking to make some easy money in Korea, get yourself some egg laying chickens that don’t have the bird flu virus because the price of eggs is skyrocketing:
A staff at an egg wholesale market in Jung-gu, Seoul, is counting stocks that are attracting desperate consumers. / Yonhap
The U.S. Department of Agriculture said Friday it is discussing with Korea ways for American egg producers to tap into the Korean market that is suffering from an egg shortage as a result of a massive outbreak of avian influenza.
Amid the rising egg prices due to the outbreak of bird flu that was detected in November, the department spokesperson said that the U.S. and Korea are “engaged in technical discussions to provide access for U.S. egg producers to the Korean liquid egg market.
“Imports from the U.S. could help limit escalating production costs for processed food manufacturers in Korea and shield consumers from soaring egg prices,” the official added.
He did not mention when the U.S. will start exporting eggs to Korea.
Starting Saturday, the Korean discount store chain Homeplus raised the retail price of 30 eggs by 9.6 percent to 7,990 won ($6.67) at its 142 stores. Homeplus has increased its egg prices five times in a month and retail prices have jumped 31.4 percent over the month.
The latest price hike by Homeplus came a day after its rival Emart increased the price of 30 eggs by 8.6 percent to 7,580 won.
Officials of the companies expect egg prices to go up again ahead of the Lunar New Year holiday later this month. [Korea Times]
You can read more at the link, but the Korean government has even dropped import tariffs against US eggs until June 30th.
I have always thought that South Korea is sitting on a massive real estate bubble considering all of its empty apartments that so many people have borrowed money invested in. According to this article the debt problems in South Korea is far worse than just the real estate market:
One of the important aspects that gets missed about Korean exports is their overall lack of diversity. About 48 percent of all Korean exports consist of electronics and related components while 31 percent are transportation goods (cars, boats, and related parts). A game-changing shift in the playing field for any product area could spell a slow but steady downward spiral for the entire Korean economy. Even a 10 percent drop in exports would literally shrink the economy by 5 percent, costing tens of thousands of jobs that ultimately depend on export revenue, exacerbating the already high underemployment rate of 14 percent and youth unemployment rate of 9 percent.
With a retinue of Chinese firms like Huawei and Oppo hot on the heels of Samsung, a potential decline becomes even more plausible considering the fact that Korean corporate culture is not always the most favorable for fostering the development of next-generation ideas and technology, often the easiest (and sometimes only) way for technology companies to remain competitive. This lack of forward thinking is most striking in the clean energy field, where Korea has been completely left out of the latest developments, despite its global reputation for being a technology powerhouse.
Another key area of concern is corporate debt. South Korea’s total corporate debt is worth about 171 percent of its GDP. Although this high percentage is not unique to Korea (the U.S. and China have about 304 percent and 169 percent, respectively), Korea is more susceptible to adverse consequences for a number of reasons. The first is the high prevalence of “zombie companies,” corporate entities that have been unable to repay debt for at least three years running. It is estimated that about a quarter of all Korean corporate debt is held by zombie companies, unlikely to ever be repaid. [The Diplomat]
You can read more at the link.
Another American fast food restaurant chain is coming to South Korea. It will be interesting to see if Dairy Queen puts a Korean twist on to any of their food offerings:
The U.S. fast food chain Dairy Queen has signed on to expand into South Korea, industry officials said Thursday.
M2G USA Investment said it has signed an agreement with International Dairy Queen Inc., which owns the franchise, to open 50 DQ Grill & Chill stores here over the next five years.
International Dairy Queen is a subsidiary of Berkshire Hathaway led by famous investor Warren Buffet. Dairy Queen, commonly known as DQ, is a chain of fast food restaurants serving hamburgers, ice cream and other frozen products, with some 6,000 locations worldwide.
A Korean foodservice company Food and Treat will handle operations of the local DQ locations. [Yonhap]