A “Phase one” agreement signed between the U.S. and China will likely to ease worries about South Korea’s trade-reliant economy. But experts say it is too early to let our guard down since negotiations could fall apart once again.
The South Korean government and economic experts on Friday expressed their expectations that the agreement will reduce uncertainties to some extent about the Korean economy. An official from the Ministry of Industry, Trade, and Energy said the agreement is the first step in the right direction that would prevent the global trade environment from further deteriorating. “Once the trade disputes between the U.S. and China are settled, it would clear some of the uncertainties that have had negative impact on the Korean economy in many ways,” said Hong Min-seok, head of the economic analysis department at the Ministry of Economy and Finance, adding that it is a positive external condition for next year.
Although the phase one agreement is a step towards the resolution of trade disputes, concerns still remain since it is not a complete resolution. The U.S. and China agreed to phase one trade deal because it was in their political interest, which means they can always start a fight again at any time.
What adds to the concern is that the phase one deal did not address many of the more difficult issues for the sake of the “mini-deal.” Those issues that triggered the fight between the two countries, such as massive subsidies to Chinese state-owned enterprises and unfair technology transfer regime for U.S. companies in China have not been dealt with this time. Some experts in the U.S. point out that it will be hard to win concessions from China in future negotiations since President Trump gave away a key bargaining chipㅡtariffsㅡto China. “We’ll have to keep an eye on the situation as they are in the initial stage of negotiations,” said Joo Won, head of the economy research division at the Hyundai Research Institute
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