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Updated May 20, 2019
South Korea: Background and U.S. Relations
Overview
South Korea (officially the Republic of Korea, or ROK) is
one of the United States’ most important strategic and
economic partners in Asia. The U.S.-ROK Mutual Defense
Treaty, signed in 1953 at the end of the Korean War,
commits the United States to help South Korea defend
itself, particularly from North Korea (officially the
Democratic People’s Republic of Korea, or DPRK).
Approximately 28,500 U.S. troops are based in the ROK,
which is included under the U.S. “nuclear umbrella.” The
U.S.-ROK economic relationship is bolstered by the U.S.-
South Korea Free Trade Agreement (KORUS FTA). South
Korea is the United States’ seventh-largest trading partner,
and the United States is South Korea’s second-largest
trading partner, behind China.
After several years of close coordination, notably on North
Korea, collaboration between the United States and South
Korea has become more inconsistent and unpredictable
under the administrations of Donald Trump and Moon Jae-
in. Moon, a progressive, was elected in May 2017 after a
decade of conservative rule in South Korea. (See Figure 1
Moon supported Trump’s “maximum pressure” campaign,
for more on ROK politics.) Moon and Trump have aligned
but also retained his longstanding preference for engaging
aspects of their approaches toward North Korea, with both
Pyongyang. During 2017, Trump Administration officials,
pursuing a rapprochement with Pyongyang. Moon brokered
including the President, repeatedly raised the possibility of
a summit between North Korean leader Kim Jong-un and
launching a preventive military strike. This possibility,
Trump in June 2018. Kim and Trump met again in Hanoi in
which would risk triggering a North Korean retaliation
February 2019, though the negotiations collapsed, dealing a
against South Korea, appears to have convinced Moon that
major blow to Moon’s agenda of developing closer ties to
the United States, rather than North Korea, represented the
the North. U.S.-DPRK and ROK-DPRK diplomacy have
greatest immediate threat to South Korean security. The
stalled since the Hanoi summit.
combination of the fear of war, an ideological preference
for engagement, and a belief that South Korea should shape
Critical differences remain on policy issues like whether
the future of the Korean Peninsula drove Moon to improve
and under what conditions to offer concessions to North
inter-Korean relations and broker U.S.-DPRK talks.
Korea and how to share costs associated with the U.S.-ROK
alliance. U.S. sanctions on Iranian exports, particularly
Kim Jong-un made these moves possible in early 2018 by
condensates, for which South Korea is a major global
dropping his belligerent posture and embarking on a push to
importer, are also a growing concern for Seoul. In the trade
break North Korea’s diplomatic isolation that has included
arena, although South Korea has been excluded for now
summits with U.S., ROK, Chinese, and Russian presidents.
from U.S. Section 232 import restrictions on autos, U.S.
Kim has pledged to “work toward complete
import restrictions remain in place on several other South
denuclearization of the Korean Peninsula,” to not conduct
Korean exports. The Trump Administration’s tendency to
nuclear or long-range missile tests while dialogue
change policy positions unexpectedly adds another element
continues, and to allow the “permanent dismantlement” of
of uncertainty.
the Yongbyon Nuclear Scientific Research Center “as the
North Korea Policy Coordination
United States takes corresponding measures.” In the weeks
following the breakdown of Trump and Kim’s Hanoi
North Korea is the dominant strategic concern within the
summit over disagreements about the timing and
U.S.-South Korea relationship. In 2016 and 2017, North
sequencing of concessions, Pyongyang generally refrained
Korea conducted scores of missile tests and three nuclear
from engaging with Washington and Seoul, and resumed
weapons tests, demonstrating major strides in its ability to
low-level provocations.
strike the continental United States with a nuclear-armed
ballistic missile. The Obama and Trump Administrations
U.S.-South Korea Security Relations
responded by expanding multilateral and unilateral
In addition to the presence of U.S. troops, South Korea is
sanctions against North Korea.
included under the U.S. “nuclear umbrella” (also known as
“extended deterrence”), and traditionally has paid for about
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South Korea: Background and U.S. Relations
50% (over $800 million annually) of the total non-
(+$6.9 billion to $22.4 billion in 2018) seeing the largest
personnel costs of the U.S. troop presence in South Korea.
gains. Foreign direct investment (FDI) between the two
countries also has increased markedly since 2012 with the
In February 2019, U.S. and ROK negotiators announced a
stock of South Korean FDI in the United States more than
preliminary one-year “Special Measures Agreement”
doubling to $51.8 billion in 2017, and U.S. FDI to South
(SMA) for dividing the cost of hosting U.S. troops in South
Korea increasing one-third, to $41.6 billion.
Korea that increased South Korea’s contribution by
approximately 8%, to $924 million. This stopgap agreement
Though many U.S. businesses highlight improved market
is scheduled to expire in December 2019. The Trump
access since the KORUS FTA’s entry into force and its
Administration reportedly had sought as much as double the
improved mechanism for dispute resolution, they also have
amount paid in the previous SMA, which covered five
criticized Seoul’s implementation of certain provisions.
years. President Trump’s budget requests, paired with his
Growth of the bilateral trade deficit, particularly in the first
sharp criticism of other allies’ contributions also has raised
years the FTA was in effect, also led some policymakers to
concerns in Seoul about the U.S. commitment to the
question the agreement’s benefits to the United States,
alliance. To facilitate talks with North Korea, Trump
while most economists view macroeconomic factors, not
suspended major U.S.-ROK military exercises, raising
trade agreements, to be the main drivers of trade balances.
questions about the alliance’s ability to maintain its state of
More recently, a significant increase in U.S. energy exports
readiness.
to South Korea contributed to a $13 billion decline in the
deficit from its 2015 peak. At $5.3 billion in 2018, the
The U.S. military is relocating its forces farther south from
deficit was back to its pre-FTA 2011 value.
bases near the border with North Korea, with South Korea
paying $9.7 billion for construction of new large-scale
At the Trump Administration’s request, the two countries
military facilities. The recently opened Camp Humphreys is
negotiated limited modifications to the KORUS FTA in
the largest overseas U.S. base in the world.
2018. South Korea agreed to a number of concessions, most
prominently on bilateral trade in motor vehicles, including a
South Korea’s Regional Relations
delayed reduction in U.S. light truck tariffs to 2041.
China’s influence in the region figures prominently in
Although President Trump characterized the changes,
South Korea’s foreign and economic policy. North Korea’s
which took effect January 1, 2019, as a “basic redoing” of
growing economic dependence on China since the early
the agreement, most analysts agree that the modifications
2000s has compelled South Korea increasingly to factor
are limited in scope and unlikely to fundamentally alter the
Beijing’s actions and intentions into its North Korea policy.
balance of commitments. The conclusion of the somewhat
China is South Korea’s largest trading partner and
contentious FTA modification negotiations and the Trump
destination for foreign direct investment. In general, South
Administration’s apparent decision to exclude South Korea
Korea tries to avoid taking steps that might antagonize
from Section 232 auto import restrictions has eased bilateral
China.
trade tensions. A number of U.S. import restrictions,
however, including a quota on South Korean steel exports
Ties with Japan are perennially fraught because of sensitive
and increased tariffs on aluminum, washing machines, and
historical issues stemming from Japan’s colonization of the
solar panels, continue to add tension to the trading
Korean Peninsula from 1910 to 1945. Three events in 2018
relationship.
and early 2019 caused ROK-Japan relations to decline
precipitously: multiple incidents involving Japanese
Figure 1. Party Strength in South Korea’s National
reconnaissance planes and South Korean naval vessels;
Assembly
South Korean Supreme Court rulings that Japanese firms
should compensate South Koreans for forced labor during
Japan’s occupation; and Moon’s steps to weaken
implementation of a 2015 ROK-Japan agreement over
“comfort women” who were forced to provide sexual
services to Japanese soldiers during the 1930s and 1940s.
Trilateral security cooperation among the United States,
Japan, and South Korea has become more difficult during
Notes: President Moon belongs to the Minjoo Party. National
this time of rising ROK-Japan tensions, which coincides
Assembly elections are held every four years and were last held in
with Seoul and Washington’s rapprochement with
April 2016. South Korea’s next presidential election is scheduled for
Pyongyang.
May 2022. South Korean presidents are limited to one five-year term.
U.S.-South Korea Economic Relations
In 2018, U.S. goods and services exports to South Korea
Mark E. Manyin,
totaled $82.0 billion, while imports totaled $87.3 billion.
Emma Chanlett-Avery,
Since the 2012 KORUS FTA’s entry into force, bilateral
Brock R. Williams,
trade flows have increased with U.S. services exports
IF10165
(+$7.9 billion to $24.6 billion in 2018) and auto imports
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South Korea: Background and U.S. Relations
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