U.S.-South Korea Relations
Released: 2017-08-04T00:00:00

T his report contains two main parts: a section describing recent events and a longer background section on key elements of the U.S.-South Korea relationship. The end of the report provides a list of CRS products on South Korea and North Korea. For a map of the Korean Peninsula, see Figure 1 below. The report identifies South Korean individuals by using their last name first. For a two-page summary of U.S.-South Korea relations, see CRS In Focus IF10165, South Korea: Background and U.S. Relations , by [author name scrubbed] et al.

Major Developments in 2017

The Overall State of U.S.-South Korea Relations

Between 2009 and the end of 2016, relations between the United States and South Korea (known officially as the Republic of Korea, or ROK) arguably were at their most robust since the formation of the U.S.-ROK alliance in 1953. Cemented by strong relationships with two successive conservative governments in Seoul, U.S.-South Korea cooperation on North Korea policy was particularly close, and the two countries effectively managed the alliance in the face of a changing threat from Pyongyang.

Under the administrations of Donald Trump and Moon Jae-in, who was elected in May 2017, core elements of the U.S.-ROK military alliance appear likely to endure, though a major diplomatic or military shock to the region could reshape some longstanding security commitments. President Trump, Secretary of Defense Jim Mattis, and Secretary of State Rex Tillerson have reiterated the United States' "ironclad commitment to defend the ROK." Secretary Mattis and Secretary Tillerson visited South Korea in February and March 2017, respectively, soon after their confirmations by the Senate. For his part, President Moon has called the alliance "the most important foundation for our diplomacy and national security." During a two-day summit meeting between the presidents in Washington, DC, in June 2017, the two governments issued a joint statement that emphasized the overlap in their approaches to North Korea.

North Korea's escalation of provocations, and particularly its two tests in July 2017 of long-range ballistic missiles, which some observers characterized as having intercontinental range, have driven closer security cooperation in recent weeks. In response to the missile tests, the United States and South Korea conducted nonroutine joint military exercises, the Moon government reversed its decision to delay the full deployment of a U.S. missile defense battery, and the two allies opened discussions about amending existing missile guidelines that limit South Korea to developing ballistic missiles with ranges greater than 800km (about 500 miles) and warheads of 500kg (about 1,100 lbs). On certain issues, however, the Trump and Moon Administrations have signaled significant policy differences that could become contentious. On North Korea, during July 2017 the two sides sometimes appeared to be out of sync, with the Trump Administration and Congress intensifying pressure against Pyongyang while the Moon government proposed multiple initiatives for inter-Korean dialogue, moves that are in keeping with Moon's history as a champion of using engagement to change North Korea's behavior. Although President Moon has said that he and President Trump agreed they "have no intention to attack North Korea," Administration officials openly have mentioned the possibility of a preemptive military strike on North Korea.

On trade, the Trump Administration has given U.S. trade deficit with South Korea a more prominent place on the bilateral agenda. Most notably, in July 2017, the Administration requested opening discussions on issues of concern in the Korea–U.S. Free Trade Agreement (KORUS FTA). Additionally, many analysts think that cost-sharing for defense will become an issue of greater friction than in the recent past, with the Trump Administration demanding more from South Korea. U.S. pressure on South Korea to increase defense spending could come during negotiations over renewing the cost-sharing Special Measures Agreement (SMA) that are due to begin in early 2018. President Trump has said that all U.S. allies, including those in the Pacific, must "pay their fair share of the cost," without specifying to which countries or which costs he was specifically referring. In remarks, the President has linked these trade and security issues, stating "South Korea, we protect, but we're losing $40 billion a year with South Korea on trade."

Additionally, as discussed below, the process of bilateral policy coordination appears to potentially have become more difficult since the advent of the Trump and Moon administrations. Although the two sides appear to be engaging in prior notification of one another's policy positions on matters such as North Korea, security policy, and trade, developments in June and July 2017 raise questions about whether the two are engaging in the type of prior consultation that from 2009 to 2016 resulted in forming joint positions on many issues. These dynamic could be particularly important on North Korea policy. While not contradictory per se , U.S. and South Korean approaches to North Korea differ. Without greater coordination on substance, timing, sequencing, and public messaging, these differences could be amplified.

Following Impeachment, South Korea Elects a New President

On May 9, 2017, South Korea elected the Minjoo (Democratic) Party's Moon as president. Moon captured just over 41% of the vote in what was essentially a five-person race. Turnout was over 77%, the highest since the 1990s. Domestic economic issues—particularly boosting economic growth and promoting social welfare—and political reform appear to have been the most important issues in voters' minds. The presidential election occurred approximately seven months earlier than originally scheduled. In March 2017 South Korea's Constitutional Court voted to uphold the impeachment of former President Park Geun-hye.

President Moon, who narrowly lost to Park in South Korea's 2012 presidential election, is a former human rights lawyer and former chief of staff to President Roh Moo-hyun, who was president from 2003 to 2008. Roh championed carving out greater independence from the United States and pursued a policy of largely unconditional engagement with North Korea. Moon promoted many of the same causes in the 2012 campaign, and during the 2017 campaign he championed policies that could be summarized as "South Korea in charge"; he advocates South Korea assuming a leading role in North Korea policy and has called for boosting South Korea's "independent defense posture" by increasing military spending. However, unlike his mentor Roh Moo-hyun, Moon also has emphasized the importance of the ROK-U.S. alliance and has articulated a need for conditions to be placed on at least some of Seoul's engagement initiatives with North Korea. Through the end of July, Moon's public approval ratings in one poll have hovered in the 75%-85% range. (For more background on South Korean politics, including a description of the scandal that toppled Park, see the " South Korean Politics " section below.)

The June 2017 U.S.-South Korea Summit

On June 29-30, 2017, in Washington, DC, Presidents Trump and Moon met for the first time. The two leaders issued a joint statement reaffirming their commitment to the U.S.-South Korea alliance and creating new and/or upgrading existing alliance coordination institutions. On North Korea, the statement said that the two sides shared the same goal and overall approach. In the statement, President Moon backed the Trump Administration's "maximum pressure" approach to Pyongyang, while President Trump supported President Moon's belief that South Korea should take a "leading role" in "fostering an environment for peaceful unification of the Korean Peninsula," including Seoul's desire to restart humanitarian and other forms of dialogue with North Korea. The joint statement said comparatively little on trade. In public and private settings, however, President Trump repeatedly placed heavy emphasis on trade issues in general and on the need to renegotiate parts of the KORUS FTA to reduce the U.S. bilateral trade deficit with South Korea. The joint statement did not mention the KORUS FTA, which raises questions about the degree to which this and future statements fully reflect U.S. government positions and the content of bilateral discussions, particularly regarding policies with little bilateral consensus. To the surprise of many observers, the controversy over President Moon's early plan to delay the full deployment of a U.S. missile defense battery in South Korea was not mentioned publicly, perhaps indicating that the two sides came to an understanding before or during the summit. President Trump said he would visit South Korea later in 2017.

During his trip to the United States, President Moon met with Members of Congress and visited the National Museum of the Marine Corps in Quantico, VA. At the museum, he laid a wreath at a memorial commemorating the Korean War battle at the Chosin (Jangjin) Reservoir, where over 10,000 U.S. troops were killed or wounded. The Chosin Reservoir battle delayed a North Korean and Chinese advance long enough to allow U.S. forces to rescue and transport to South Korea tens of thousands of refugees, including President Moon's parents.

Presidents Trump and Moon met again during the July 2017 Group of 20 (G-20) summit in Hamburg, including during a trilateral U.S.-South Korea-Japan summit that included Japanese Prime Minister Shinzo Abe. The three leaders pledged to work together "to achieve the complete, verifiable, and irreversible denuclearization of the Korean Peninsula in a peaceful manner," and to "continue to cooperate to apply maximum pressure on the DPRK to change its path, refrain from provocative and threatening actions, and take steps necessary to return to serious denuclearization dialogue."

North Korea Policy Coordination

Dealing with North Korea (officially known as the Democratic People's Republic of Korea, or DPRK) is the dominant strategic element of the U.S.-South Korean relationship. From 2009 to 2016, Seoul and Washington maintained tight coordination over North Korea policy, following a joint approach—often called "strategic patience"—that emphasized pressuring the regime through expanded multilateral sanctions and muscular displays of military cooperation.

In the June 2017 joint statement, the two countries stated that they shared a goal of "complete, verifiable, and irreversible denuclearization" of the Korean Peninsula and that they would "coordinate closely" by creating a "high-level strategic consultation mechanism" to achieve this goal. The joint statement outlined the ways the two governments' approaches toward North Korea overlap, presenting them as a common approach of applying "maximum pressure on the DPRK" to "compel Pyongyang to cease its provocative actions and return to sincere and constructive talks." "Maximum pressure" is a phrase that many Trump Administration officials have used to describe their policy toward Pyongyang. In the statement, the two agreed that "the door to dialogue with the DPRK remains open under the right circumstances." In two items that the Moon government highlighted after the summit, President Trump "supported" South Korea's "leading role" in "fostering an environment for peaceful unification of the Korean Peninsula," and "expressed support" for President Moon's "aspiration to restart inter-Korean dialogue on issues, including humanitarian affairs."

Despite such language, challenges may arise in future policy coordination efforts because of differing interpretations of the joint statement, particularly what constitutes "the right circumstances" for opening dialogue on security issues with North Korea. A key will be whether the two sides consult and coordinate with one another before embarking on specific policy initiatives.

The Trump Administration's North Korea Policy

Shortly after coming into office, the Trump Administration initiated a review of U.S. North Korea policy. In April 2017, the State Department, Pentagon, and Director of National Intelligence issued a statement that the United States will seek to "pressure North Korea into dismantling its nuclear, ballistic missile, and proliferation programs by tightening economic sanctions and pursuing diplomatic measures with our Allies and regional partners." Since then, the Administration has moved to implement U.S. sanctions against North Korea more aggressively, including by designating Chinese financial entities and asking other countries to curtail their economic interactions with Pyongyang. The Administration has stated that it hopes that pressure will convince the North Korean regime "to de-escalate and return to the path of dialogue." Secretary of State Tillerson has said that dialogue would be held only "with an understanding that a condition of those talks is there is no future where North Korea holds nuclear weapons or the ability to deliver those nuclear weapons...."

Secretary of State Tillerson has said that the Administration is seeking neither a change in nor a collapse of the governing regime of Kim Jong-un. The Administration has cast its approach as a departure from the Obama Administration's "strategic patience." However, many of the elements remain: expanding U.S. and international sanctions, emphasizing China's ability to pressure North Korea, and coordinating policy with U.S. allies. Three key changes appear to be that (1) the Trump Administration has raised the priority level of the North Korea threat; (2) the timeframe for U.S. action has been accelerated; and (3) President Trump has explicitly stated that his administration is willing to calibrate other areas of U.S.-China relations according to China's degree of cooperation on North Korea.

North Korea's actions since President Trump's inauguration have helped to heighten the sense of urgency surrounding North Korea's weapons of mass destruction (WMD) programs. During the first 7 months of 2017, North Korea conducted nearly 20 ballistic missile tests, in contravention of UNSC resolutions. Following North Korea's two tests in July 2017 of what it and other observers described as ICBMs, the Defense Intelligence Agency (DIA) reportedly concluded that Pyongyang will be able to deploy a nuclear-tipped ICBM in 2018, achieving a milestone years earlier than predicted. Also during the summer of 2017, Congress passed and President Trump signed into law H.R. 3364 / P.L. 115-44 , the Countering America's Adversaries through Sanctions Act, which strengthens the use of sanctions on those who facilitate North Korea's nuclear weapons and missile programs.

In addition to these tests, Pyongyang initiated other moves in 2017 that led President Trump to label it "a reckless and brutal regime" that has "no respect for human life." In March, North Korea was accused of sending attackers to assassinate Kim Jong-un's half-brother in Malaysia using the banned chemical VX nerve agent. In June, North Korea released Otto Warmbier, a U.S. college student who had been detained in North Korea for 17 months; Warmbier returned to the United States in a coma, having suffered brain trauma while detained in North Korean, and died just days later. Securing Warmbier's release required multiple interactions between U.S. and North Korean diplomats, including a trip to North Korea by Joe Yun, U.S. Special Representative for North Korea Policy and Deputy Assistant Secretary for Korea and Japan.

Thus far, the Administration has emphasized pushing China, which accounts for around 90% of North Korea's trade, to fully implement United Nations Security Council (UNSC) sanctions and take other steps to pressure North Korea. President Trump has repeatedly emphasized his intention to make China use its leverage to pressure North Korea, but has at times also suggested that he is no longer relying on or confident in Beijing's ability to pressure Pyongyang. In late June 2017, the Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued a preliminary rule that U.S. financial institutions be prohibited from maintaining correspondent accounts for, or on behalf of, a Chinese financial institution, the Bank of Dandong. FinCEN determined that the bank "acts as a conduit" for North Korea to access the U.S. and international financial systems for entities involved in North Korea's programs to develop weapons of mass destruction (WMD) and missile capabilities. The same day, Treasury's Office of Foreign Assets Control (OFAC) designated a Chinese shipping company and two Chinese nationals for economic sanctions, charging them with assisting North Korea in evading international sanctions. The same week, the Trump Administration announced the approval of an arms sales package to Taiwan.

Some U.S. and South Korean commentators have characterized Administration officials' remarks on North Korea in March and April as inconsistent, particularly on the questions of under what specific pre-conditions, if any, the United States would insist on before entering formal negotiations with North Korea and whether the United States is prepared to launch a preemptive attack against North Korea. Some South Koreans have been alarmed by President Trump's remarks about the chances of a "major, major [military] conflict with North Korea." In July 2017, Chairman of the Joint Chiefs of Staff Joseph Dunford said

Many people have talked about military options as ... "unimaginable." But ... it is not unimaginable to have military options to respond to North Korean nuclear capability. What's unimaginable to me is allowing a capability that will allow a nuclear weapon to land in Denver, Colorado ... ideally we will denuclearize the North Korean—the Korean Peninsula with economic and political means. But in the meantime, I can assure the American people that our job is to develop military options in the event that that fails.

However, the Administration also has given signals of a readiness to talk to North Korea. The President has said that he would be "honored" to meet with North Korean leader Kim Jong-un, calling Kim a "smart cookie." In March 2017, the Administration reportedly approved visa requests for a group of North Korean officials to travel to the United States to hold discussions with U.S. scholars and former U.S. officials, only to reverse its decision later the same day after learning of North Korea's use of VX to kill Kim Jong-un's brother in Malaysia. Whether the apparent inconsistency is unintended or deliberate remains unclear.

The Moon Administration's North Korea Policy

For nearly two decades, President Moon has been associated with efforts to promote inter-Korean engagement and dialogue. He served as chief of staff to former President Roh Moo-hyun (2003-2008), who carried out many initiatives under Seoul's "sunshine policy" that involved significant South Korean investments in North Korea. President Moon has argued against what many critics called the Park-Obama "sanctions-only" approach toward North Korea. Early in the 2017 election campaign, he pledged to visit North Korea as president, as well as to reopen and expand the Kaesong Industrial Complex (KIC), an inter-Korean industrial park located in North Korea that former President Park shut down in 2016 to increase pressure on Pyongyang.

In the weeks initially following his election President Moon has emphasized repeatedly the overlap between his approach and that of the Trump Administration. "As long as North Korea continues its provocations, I believe that we will have no choice but to apply additional and strong pressure on it." President Moon, however, has argued that his immediate predecessors placed too little emphasis on engaging North Korea. "To resolve the issue, we have to add dialogue to the current menu of sanctions and pressure" under the right conditions, an element he says is consistent with the Trump Administration's approach. The essence of his approach appears to be that denuclearization policy—including sanctions—and low-level inter-Korean initiatives—such as humanitarian assistance—are complementary and for the time-being should operate on parallel tracks.

Differences in emphasis between Washington and Seoul surfaced in the weeks immediately following the first Trump-Moon summit. Acting on the understanding that the Trump Administration has signaled its agreement with his government's approach, President Moon in a July speech in Berlin said he "is ready" to meet with Kim Jong-un "at any time at any place, if the conditions are met and if it will provide an opportunity to transform the tension and confrontation on the Korean Peninsula." His government has lifted restrictions on South Korean nongovernmental organizations (NGOs) contacting North Korea. Moon also has proposed holding two dialogues with North Korea: one to discuss holding a round of reunions of families separated by the Korean War, and another to discuss military tension-reduction and confidence-building measures in the demilitarized zone (DMZ). As of August 2, North Korea publicly has dismissed Moon's proposals.

Asked about South Korea's proposals, then-White House Press Secretary Sean Spicer said, "President [Trump] has made clear in the past with respect that any type of conditions that would have to be met are clearly far away from where we are now." A Japanese Foreign Ministry spokesperson reportedly commented, "this is not the time for talks, but to apply pressure." These responses could indicate that the United States, South Korea, and Japan are not fully coordinating their messages about North Korea policy. Some observers go further, arguing that it indicates South Korea's views about the timing and nature of when to propose talks with North Korea conflict with the views of the United States and Japan.

Assessments that North Korea can reach the United States with its long-range missiles have heated up the continuing debate in South Korea over whether the country should build its own nuclear weapons rather than depending on the U.S. nuclear "umbrella." South Korean Minister of Defense Song Yong-moo said that South Korea was not considering acquiring its own nuclear weapons but was reviewing the possibility of building nuclear-powered submarines. Producing nuclear fuel for such submarines would require negotiations with the United States. (For more background on cooperation over North Korea and inter-Korean relations, see " North Korea in U.S.-ROK Relations " below.)

THAAD Deployment

On July 29, 2017, shortly after North Korea's long-range ballistic missile test, President Moon's government agreed to a full deployment of the controversial U.S. Terminal High Altitude Area Defense (THAAD) ballistic missile defense (BMD) system in South Korea. The deployment, which a Ministry of National Defense spokesman said was "temporary," reversed Seoul's July 28 decision to delay a full deployment until a full-scale environmental impact assessment could be completed, a process that was expected to take months. In May 2017, in one of his first major moves after entering office, Moon had temporarily suspended the installation of four launchers in the six-launcher batteries. The other two had been deployed in March, earlier than originally planned, a move that President Moon during the election campaign had called "very regrettable." A series of North Korea missile launches in March 2017, along with South Korea's early presidential election in May, apparently accelerated the timetable of installing the THAAD battery, which had been scheduled for later in 2017.

Critics of the THAAD deployment, including those within the Moon Administration, have pointed to President Trump's statement in late April that South Korea should pay for the system as justification for investigating the previous president's decision to accept the U.S. system. Trump's National Security Advisor, H.R. McMaster, later said that the United States would pay for the $1 billion system in line with the initial agreement. Despite this assurance, Trump's statement appeared to increase suspicions among some South Koreans that the United States would eventually ask South Korea to cover the cost of the U.S. asset. The land for the THAAD system was provided by South Korea, but the United States is to pay for the system and its operation. According to press reports, estimated costs for the system range from $800 million to $1.6 billion. Among the South Korean critics of the THAAD deployment have been residents near the site. When the Park Administration announced in 2016 that the THAAD battery would be positioned in Seongju, North Gyeongsang Province, local residents protested. Among their concerns were health issues associated with THAAD's X-band radar.

The March 2017 announcement that THAAD was being deployed prompted a stern response from China, which warned that it would "take the necessary steps to safeguard our own security interests, and the consequences will be shouldered by the United States and South Korea." Although specific retaliation measures were not announced, Chinese state media have encouraged Chinese consumers to boycott South Korean companies, tourism officials said that they would cease booking trips to South Korea by Chinese travelers, and Chinese officials have suspended operations at China-based retail stores of Lotte, citing violations of safety codes. Lotte had owned the land that is being used to host the THAAD battery until early 2017, when it transferred the property to the Korean government. During his March 2017 visit to Seoul, Secretary Tillerson said that China's "economic retaliation against South Korea is inappropriate and troubling." In a May 2017 phone call with Chinese President Xi Jinping, President Moon reportedly said in order to settle differences over the deployment, North Korea needed to cease provocations, implicitly asking China to do more to rein in North Korea. (For more, see " Security Relations and the U.S.-ROK Alliance " below.)

Revisiting KORUS FTA Commitments

The Trump Administration has made statements suggesting that the outcomes of the KORUS FTA, in effect since March 2012, have been a disappointment. In order to address concerns over the agreement and its implementation, United States Trade Representative (USTR) Robert Lighthizer requested an official meeting of the Joint Committee under the KORUS FTA to discuss potential modifications. According to the FTA text, such a meeting must be convened within 30 days of the July 12, 2017, request. In a July 24 response, the South Korean Minister of Trade, Industry, and Energy (MOTIE) asked to delay this meeting to allow time to finish an ongoing "restructuring," which includes establishing a Trade Office and new Minister for Trade within the existing Ministry. MOTIE also requested that the Joint Committee evaluate together the agreement's effects on bilateral trade and the concerns posed by the Trump Administration to arrive at a "common understanding" of the issues to be addressed. The Trump Administration has focused specifically on the growth in the bilateral U.S. trade deficit with South Korea over the five years the agreement has been in effect. Many economists suggest that other factors, not the KORUS FTA, have been the major drivers of the growth in the trade deficit during this period, including a relative slump in the South Korean economy, highlighted by declining South Korean imports from its major trade partners.

The extent of possible KORUS FTA modifications to be discussed remains unclear at this point. Given its constitutional authority over U.S. trade policy, Congress would play an important role in the negotiation and consideration of any changes to the KORUS FTA. On July 17, the Chairmen and Ranking Members of the Senate and House committees of jurisdiction on trade wrote to Ambassador Lighthizer to highlight congressional authorities regarding this process and expectations for consultation. The Trump Administration may intend to focus its initial discussions with South Korea on implementation issues or other aspects of the bilateral trade relationship not requiring specific amendments to the FTA text, as it has not sent Congress official notification of its intent to negotiate with South Korea. Such notification, as well as a listing of specific objectives, would be required under the most recent grant of Trade Promotion Authority, if the Administration seeks to have a renegotiated agreement considered by Congress under expedited legislative procedures. For example, the Administration notified Congress of its intent to renegotiate the North American Free Trade Agreement (NAFTA) on May 18, 2017, before any official renegotiation talks were held among the parties of the agreement.

Contradictory Developments in South Korea-Japan Relations

North Korea's provocations have provided South Korea and Japan with a strategic rationale to increase cooperation bilaterally, as well as trilaterally with the United States. Since early 2016, the three countries appear to have closely coordinated their responses to North Korea's nuclear tests and missile launches. In November 2016, Seoul and Tokyo concluded a General Security of Military Information Agreement (GSOMIA), which the United States has welcomed because it could institutionalize trilateral defense cooperation. The two countries first negotiated a GSOMIA in 2012, only to have Seoul withdraw from the agreement at the last minute due to domestic opposition. President Moon's Minjoo party opposed the signing of the GSOMIA, but since assuming the presidency, Moon reportedly has upheld the agreement.

Although South Korea-Japan cooperation and U.S.-South Korea-Japan cooperation over North Korea policy appears to be continuing under Moon, tensions between Seoul and Tokyo may mount over historical issues. In South Korea, opposition has risen over a December 2015 agreement on how to resolve the "comfort women" issue, a euphemism that refers to the thousands of women who were forced to provide sex to Japanese soldiers during the 1930s and 1940s when Japan occupied Korea. Several prominent politicians, including President Moon, have called for the agreement to be renegotiated, a position that was one of the few areas of agreement among all five candidates in the May presidential election. In December 2016, South Korean activists erected a comfort woman statue facing the Japanese consulate in Busan, South Korea's second-largest city—similar to a statue facing the Japanese embassy in Seoul. In response, Japan withdrew its ambassador for several weeks and suspended talks on reconstituting a bilateral currency swap agreement that had been allowed to expire during the previous downturn in relations.

In his first days in office, President Moon spoke with Prime Minister Abe by phone. Reportedly, the president told the prime minister that most South Koreans could not accept the comfort women agreement, but did not use the word "renegotiation." He also reportedly said that efforts to overcome differences over historical issues should not interfere with the two countries' bilateral relations, particularly coordination over North Korea. In late July 2017, the Moon government created a task force to review the comfort women agreement. The nine-person group plans to announce its assessment by the end of 2017.

A poor relationship between Seoul and Tokyo jeopardizes several important U.S. interests, including by making trilateral cooperation over North Korea policy more difficult and hampering the ability to respond effectively to China. Some policy analysts have called for the United States to become more directly involved in trying to improve relations between South Korea and Japan. The Obama Administration tried to help manage relations between Seoul and Tokyo, and in recent years Members have introduced and Congress has passed a number of bills and resolutions that include language encouraging greater trilateral cooperation. (For more, see the " South Korea's Regional Relations " section below.)

Background on U.S.-South Korea Relations

Overview

While the U.S.-South Korea relationship is highly complex and multifaceted, five factors arguably drive the scope and state of relations between the two allies, as well as congressional interest in U.S.-South Korea relations:

the challenges posed by North Korea, particularly its weapons of mass destruction programs and perceptions in Washington and Seoul of whether the Kim Jong-un regime poses a threat, through its belligerence and/or the risk of its collapse; China's rising influence in Northeast Asia, which has become an increasingly integral consideration in many aspects of U.S.-South Korea strategic and economic policymaking; South Korea's transformation into one of the world's leading economies—with a strong export-oriented industrial base—which has led to an expansion in the number and types of trade disputes and helped drive the two countries' decision to sign the South Korea-U.S. Free Trade Agreement (KORUS FTA), which Congress approved in 2011; South Korea's continued democratization, which has raised the importance of public opinion in Seoul's foreign policy; and the growing desire of South Korean leaders to use the country's middle-power status to play a larger regional and, more recently, global role.

Additionally, while people-to-people ties generally do not directly affect matters of "high" politics in bilateral relations, the presence of over 1.8 million Korean Americans and the hundreds of thousands of trips taken annually between the two nations has helped cement the two countries together. Former South Korean President Park Geun-hye and her predecessor, Lee Myung-bak, spoke before joint meetings of Congress, in May 2013 and October 2011, respectively. Six South Korean presidents have addressed joint meetings of Congress since the ROK's founding in 1948.

Large majorities of South Koreans say they value the U.S.-ROK alliance and have positive opinions of the United States. Since at least 2014, South Koreans have consistently indicated that the United States is their favorite nation, according to one opinion poll. However, many South Koreans are resentful of U.S. influence and chafe when they feel their leaders offer too many concessions to the United States. Many South Korean officials also tend to be wary of being drawn into U.S. policies that they perceive as possibly antagonizing China, and are much more suspicious of Japan's actions in East Asia than are most U.S. policymakers. Although many of these concerns are widely held in South Korea, they are particularly articulated by South Korea's progressive groups—such as President Moon's Minjoo Party—who opposed much of President Park's agenda, including the relatively hard line she took against North Korea.

Historical Background

The United States and South Korea have been allies since the United States intervened on the Korean Peninsula in 1950 and fought to repel a North Korean takeover of South Korea. Over 33,000 U.S. troops were killed and over 100,000 were wounded during the three-year conflict. On October 1, 1953, a little more than two months after the parties to the conflict signed an armistice agreement, the United States and South Korea signed a Mutual Defense Treaty, which provides that if either party is attacked by a third country, the other party will act to meet the common danger. The United States maintains about 28,500 troops in the ROK to supplement the 650,000-strong South Korean armed forces. South Korea deployed troops to support the U.S.-led military campaign in Vietnam. South Korea subsequently has assisted U.S. deployments in other conflicts, most recently by deploying over 3,000 troops to play a noncombat role in Iraq and over 300 noncombat troops to Afghanistan.

Beginning in the 1960s, rapid economic growth propelled South Korea into the ranks of the world's largest industrialized countries. For nearly two decades, South Korea has been one of the United States' largest trading partners. Economic growth, coupled with South Korea's transformation in the late 1980s from a dictatorship to a democracy, also has helped transform the ROK into a mid-level regional power that can influence U.S. policy in Northeast Asia, particularly the United States' approach toward North Korea.

North Korea in U.S.-ROK Relations

Coordination over North Korea Policy

Dealing with North Korea is the dominant strategic element of the U.S.-South Korean relationship. South Korea's growing economic, diplomatic, and military power has given Seoul a much more direct and prominent role in Washington's planning and thinking about how to deal with Pyongyang. North Korea's apparent progress toward possibly developing the capacity to militarily strike the United States directly, however, could have contradictory effects. On the one hand, the United States' security is becoming more intertwined with South Korea's ability to influence North Korea's behavior. On the other hand, a greater sense of threat could lead to future scenarios where U.S. policymakers feel they need to act in a more unilateral fashion.

Under the Obama Administration and the successive South Korean presidencies of Lee Myung-bak (2008-2013) and Park Geun-hye (2013-2017), the United States and South Korea in effect adopted a joint approach to Pyongyang, sometimes called "strategic patience," that had four main components:

keeping the door open to Six-Party Talks over North Korea's nuclear program but refusing to restart them without a North Korean assurance that it would take "irreversible steps" to denuclearize; insisting that Six-Party Talks and/or U.S.-North Korean talks must be preceded by North-South Korean talks on denuclearization and improvements in North-South Korean relations; gradually attempting to alter China's strategic assessment of North Korea; and responding to Pyongyang's provocations by tightening sanctions against North Korean entities and conducting a series of military exercises.

The two countries' approach appeared to focus on containing, rather than rolling back, North Korea's nuclear activities by gradually increasing international pressure against North Korea. One drawback is that it allowed Pyongyang to control the day-to-day situation, according to some experts. While Washington and Seoul waited to react to Pyongyang's moves, the criticism runs, North Korea continued to develop its nuclear and missile programs and embarked on a propaganda offensive designed to shape the eventual negotiating agenda to its benefit. Prior to 2016, when President Park hardened her approach in response to North Korea's January nuclear test and February satellite launch, many of her proposed initiatives with North Korea appeared to be designed to rectify these perceived shortcomings. North Korea's general refusal to accept Park's overtures, however, did not provide her government with an opportunity to apply her policies.

The joint U.S.-ROK approach involved elements of both engagement and pressure. Washington and Seoul tended to reach out to North Korea during relatively quiescent periods. In contrast, they tended to emphasize pressure tactics during times of increased tension with North Korea. These periods of tension occurred repeatedly after Lee Myung-bak's inauguration in February 2008. Most notably, they included

North Korean nuclear tests in May 2009, February 2013, January 2016, and September 2016; North Korean long-range rocket launches in April 2009, April 2012, December 2012, and February 2016; the March 2010 sinking of a South Korean naval vessel, the Cheonan ; the November 2010 North Korean artillery attack on the South Korean island of Yeonpyeong-do; and an August 2015 landmine explosion—blamed on North Korea—on the South Korean side of the demilitarized zone (DMZ).

The shelling of Yeonpyeong Island was North Korea's first direct artillery attack on ROK territory since the 1950-1953 Korean War and served to harden South Korean attitudes toward North Korea. President Lee reportedly stated that he wanted to order a retaliatory air strike, but the existing rules of engagement—which he subsequently relaxed—and the existence of the U.S.-ROK military alliance restrained him. After North Korea's attack on Yeonpyeong Island, many conservative Koreans criticized as insufficient the Lee government's military response, which primarily consisted of launching about 80 shells at North Korea and holding large-scale exercises with the United States. Park Geun-hye made boosting deterrence against North Korea a tenet of her presidency, and vowed to retaliate if North Korea launches another conventional attack.

In 2016, in response to Pyongyang's nuclear tests and missile launches, Washington and Seoul placed significant emphasis on the harder elements of their approach. Most notably, the two countries

successfully pushed the UNSC to pass two resolutions (UNSC Resolution 2270 in March 2016 and UNSC Resolution 2321 in November 2016) expanding international sanctions; launched a global campaign to persuade other countries to curtail relations with North Korea, including curbing other countries' participation in the DPRK's state-run labor export programs, which are believed to generate income for the government in Pyongyang; announced that they would deploy the Terminal High Altitude Area Defense ballistic missile defense system in South Korea, a step that the two countries had deferred for months and that China has protested loudly; and launched a bilateral North Korean Human Rights Consultation mechanism.

In another significant step, Seoul shut down the Kaesong Industrial Complex, which had generated approximately 25%-30% of North Korea's export revenue. The complex, which was established in part to be an example for market-oriented reforms in North Korea, was the last physical remnant of the inter-Korean cooperation that sprouted during the years of Seoul's "sunshine policy" in 2000-2008. It also, however, provided the North Korean government with access to a stream of hard currency, estimated to be worth over $500 million in total since the complex opened in 2004.

Additionally, in the aftermath of North Korea's January 2016 nuclear test, Congress passed and on February 18 President Obama signed H.R. 757 / P.L. 114-122 , the North Korea Sanctions Enforcement Act of 2016, which expands unilateral U.S. sanctions against Pyongyang and other entities working with the North Korean government. Among the steps the Obama Administration took to implement P.L. 114-122 were a June 2016 determination by the Secretary of the Treasury that North Korea is a jurisdiction of money laundering concern, and a July 2016 State Department report designating Kim Jong-un and senior North Korean officials as personally responsible for widespread human rights violations.

Inter-Korean Relations and Park Geun-Hye's "Trustpolitik"

Relations between the two Koreas have been poor since the 2010 attacks on the Cheonan and on Yeonpyeong-do. From 2011 to 2015, although inter-Korean relations were tense, they remained stable, and President Park spent the first three years of her presidency proposing a number of inter-Korean projects, exchanges, and dialogues in order to build trust between North and South Korea. However, she also stated that a nuclear North Korea "can never be accepted." North Korea for the most part resisted Park's outreach, and Park effectively abandoned many elements of her policy in the face of the North's provocations. The Obama Administration publicly expressed support for President Park's so-called "trustpolitik" policy, and since 2009 generally appeared to allow Seoul to take the lead in determining how to best deal with North Korea.

A key element in Park's plan was attempting to deter North Korea's provocations by strengthening South Korea's defense capabilities, while simultaneously promoting a range of dialogues and projects with North Korea, generally on a relatively small scale. Among short-term inter-Korean initiatives, she proposed that the two Koreas resume a regular dialogue process; hold regular reunions for families separated since the Korean War ended in 1953; take steps to link their rail systems and ports, with an eventual goal of connecting the Korean Peninsula to the Eurasian continent; and launch assistance programs by South Korea to help North Korean pregnant mothers and young children, as well as North Korea's agricultural sector. Aside from a brief thaw in the fall of 2015, when a round of family reunions were held, North Korea generally did not respond positively to Park's initiatives, and attempts by the two sides to enter into sustained negotiations did not produce tangible results before relations plunged in 2016.

After North Korea's January 2016 nuclear test and February 2016 missile launch, South Korea announced new unilateral sanctions on Pyongyang, including a refusal to allow ships that have travelled to North Korea within the previous six months to dock in South Korea. In October 2016, following a small increase in elite defections during the year, President Park issued an unprecedented appeal encouraging North Koreans to defect, reportedly saying, "please come to the bosom of freedom in the South." Later that same month, South Korean Foreign Minister Yun Byung-se stated that the United States and South Korea recognize the "need to accelerate change in North Korea," by taking steps such as pressuring the country to improve its human rights record and increasing the penetration of outside information into North Korea. As part of its response to South Korea's moves and statements, North Korea's state-run media issued a number of threats against South Korea as well as vulgarities and language personally criticizing President Park.

In another sign of hardening attitudes toward North Korea, the Park government in early September 2016 announced that due to North Korea's continued provocations, South Korea was unlikely to provide direct humanitarian assistance—or allow South Korean organizations to provide assistance—to help North Korea deal with large-scale flooding that occurred earlier in the month. Also, in March 2016, by a 220-0 vote, South Korea's National Assembly passed a North Korean human rights bill. The bill was first introduced in 2005, the year after Congress passed and President George W. Bush signed the North Korean Human Rights Act ( H.R. 4011 / P.L. 108-333 ). The South Korean bill generally was championed by South Korean conservative groups and opposed by progressives. Among other steps, the bill requires the government to develop a human rights promotion plan and establishes a foundation that is charged with documenting North Korean human rights abuses.

Deterrence Issues

One factor that may influence U.S.-ROK cooperation on North Korea is Pyongyang's apparent progress in its missile and nuclear programs. To reassure South Korea and Japan after North Korea's February 2013 test, President Obama personally reaffirmed the U.S. security guarantee of both countries, including extended deterrence under the United States' so-called "nuclear umbrella." In March 2013, Park stated that "provocations by the North will be met by stronger counter-responses," and the chief operations officer at South Korea's Office of the Joint Chiefs of Staff was widely quoted as saying that if South Korea is attacked, it will "forcefully and decisively strike not only the origin of provocation and its supporting forces but also its command leadership." (South Korean defense officials later clarified that "command leadership" referred to mid-level military commanders who direct violent attacks and not North Korean political leaders such as Kim Jong-un.) According to reports, since 2015 the U.S. and ROK militaries have prepared and exercised new war plans to strike North Korean WMD facilities and top leadership in an emergency situation.

Since North Korea's 2010 shelling of Yeonpyeong Island, South Korean leaders have shown a greater willingness to countenance the use of force against North Korea. After the attack, the Lee government pushed the alliance to develop a new "proactive deterrence" approach that calls for a more flexible posture to respond to future attacks, as opposed to the "total war" scenario that previously drove much of U.S. Forces Korea (USFK) defense planning. For instance, Lee pushed the United States to relax restrictions on South Korean ballistic missiles and relaxed the rules of engagement to allow frontline commanders greater freedom to respond to a North Korean attack without first asking permission from the military chain of command. Shortly after North Korea's September 2016 nuclear test, South Korean Defense Minister Han Min-koo announced a "Korean Massive Punishment and Retaliation" plan to strike Pyongyang and top North Korean leadership in the case of a nuclear attack. Such changes have made some analysts and officials more concerned about the possibility that a small-scale North Korean provocation could escalate. U.S. defense officials insist that the exceedingly close day-to-day coordination in the alliance ensures that U.S.-ROK communication would be strong in the event of a new contingency. The 2013 "Counter-Provocation Plan" was developed to adapt both to the new threats envisioned from North Korea and to the South Korean government's new attitudes about retaliation.

South Korea Nuclear Armament Debate

Since 2013, North Korea's nuclear weapon tests and multiple missile launches have rekindled a debate in South Korea about developing its own nuclear weapons capability, notwithstanding Seoul's reliance on the U.S. "nuclear umbrella." Some analysts have argued that North Korea's advancing capability undermines U.S. protection because of Pyongyang's growing credibility that it could launch a second nuclear strike. In one 2016 Asan Institute poll, 65% of respondents indicated they favor nuclearization, while 31% opposed. This is the highest level of support since the Asan Institute began asking this question in 2010. Debates about nuclearization have become more prominent in political circles in Seoul following the 2016 tests. Following North Korea's September nuclear test, a group of National Assembly members from the then-ruling Saenuri Party called on the ROK government to consider developing nuclear weapons. A presidential advisory group, the National Unification Advisory Council, in an October 2016 report recommended that South Korea consider a return of U.S. tactical nuclear weapons to South Korea. Those weapons were removed in 1991, and U.S. nuclear weapons are deliverable on long-range bombers as well as B-52s from nearby Guam. The Korean government is also considering a proposal to develop a nuclear-powered attack submarine. As a candidate, President Trump in spring 2016 stated that he was open to South Korea developing its own nuclear arsenal to counter the North Korean nuclear threat.

Analysts point to the potentially negative consequences for South Korea if it were to develop its own nuclear weapons, including significant costs; reduced international standing in the campaign to denuclearize North Korea; the possible imposition of economic sanctions that would be triggered by leaving the global nonproliferation regime; and potentially encouraging Japan to develop nuclear weapons capability. For the United States, South Korea developing nuclear weapons could mean diminished U.S. influence in Asia, the unraveling of the U.S. alliance system, and the possibility of creating a destabilizing nuclear arms race in Asia.

To reassure South Korea after North Korea's tests, Obama Administration officials reaffirmed the U.S. security guarantee, including extended deterrence under the United States' so-called "nuclear umbrella." An October 2016 joint "2+2" statement issued by U.S. and South Korean Foreign and Defense Ministers restated the U.S. position that "any use of nuclear weapons [by North Korea] will be met with an effective and overwhelming response." At the 2+2 meeting, the two sides agreed to establish a new, Extended Deterrence Strategy and Consultation Group (EDSCG).

Security Relations and the U.S.-ROK Alliance

The United States and South Korea are allies under the 1953 Mutual Defense Treaty. Under the agreement, U.S. military personnel have maintained a continuous presence on the Korean Peninsula and are committed to helping South Korea defend itself, particularly against any aggression from the North. South Korea is included under the U.S. "nuclear umbrella," also known as "extended deterrence." The United States maintains about 28,500 troops in the ROK. In the past, U.S. commanders in South Korea stated that the future U.S. role in the defense of South Korea would be mainly an air force and naval role. Since 2004, the U.S. Air Force has increased its strength in South Korea through the regular rotation into South Korea of advanced strike aircraft. These rotations do not constitute a permanent presence, but the aircraft often remain in South Korea for weeks and sometimes months for training.

The ROK armed forces today total over 625,000 troops, with about 490,000 in the Army, 70,000 in the Air Force, and 65,000 in the Navy. Due to the declining birth rate, the armed forces are planning to reduce their numbers by nearly one-fifth by 2022. In 2015, South Korea had the 10 th - largest defense budget in the world, constituting about 2.4% of its GDP. A bilateral understanding between Washington and Seoul gives U.S. forces the "strategic flexibility" to respond to contingencies outside the peninsula, but under the condition that South Korea would have to consent to their deployment in an East Asian conflict. In the past, issues surrounding U.S. troop deployments have been a flashpoint for public disapproval in South Korea of the military alliance, led by progressive political groups. In recent years, however, public support for the alliance has become broader and more resilient to incidents involving U.S. bases and soldiers in South Korea.

Despite the strengths of the alliance, tensions periodically arise in the partnership. Some of these involve typical alliance conflicts over burden sharing and cost overruns of ongoing realignment initiatives. Some analysts speculate that President Trump's emphasis on U.S. allies contributing "their fair share" of the burden of U.S. protection, however, could increase tensions in the relationship in the years to come. Other issues in the alliance reflect sensitive sovereignty concerns such as Seoul's control over its own military forces and its desire to develop its own defense industry without dependence on American equipment.

Upgrades to the Alliance

Since 2009, the two sides have accelerated steps to transform the U.S.-ROK alliance, broadening it from its primary purpose of defending against a North Korean attack to a regional and even global partnership. At the same time, provocations from North Korea have propelled more integrated bilateral planning for responding to possible contingencies. In 2011, the allies adopted a "proactive deterrence" policy to respond swiftly and forcefully to further provocations. Increasingly advanced joint military exercises have reinforced the enhanced defense partnership. In 2013, U.S. officials disclosed that U.S. B-52 and B-2 bombers participated in exercises held in South Korea, following a period of unusually hostile rhetoric from Pyongyang. After North Korea's fourth and fifth nuclear tests in 2016, the United States flew a B-52 bomber and a B-1B strategic bomber as a signal of commitment to South Korea.

The number and pace of high-level meetings have also increased. Since holding their first ever so-called "2+2" meeting between the U.S. Secretaries of State and Defense and their South Korean counterparts in 2010, the two sides have held two more 2+2 meetings with an expansive agenda of cooperative initiatives that includes issues far beyond shared interests on the Korean Peninsula. These areas include cybersecurity, space, missile defense, nuclear safety, climate change, Ebola, and multiple issues in the Middle East. Since 2011, the Korea-U.S. Integrated Defense Dialogue (KIDD) has held biannual meetings at the Deputy Minister level to serve as the umbrella framework for multiple U.S.-ROK bilateral security initiatives, the latest of which took place in Seoul mid-September 2016. The United States and ROK also regularly conduct a Security Consultative Meeting (SCM) between the Secretary of Defense and Ministry of National Defense to reaffirm the alliance, analyze key threats, consult on weapon systems, coordinate the strategic posture, and discuss matters of mutual interest such as the wartime operational control (Opcon) transition plan (discussed below).

Ballistic Missile Defense and THAAD Deployment Background

The decision in July 2016 to deploy the Terminal High-Altitude Area Defense missile defense system took place after years of consideration and controversy in South Korea. According to reports, the U.S. Department of Defense (DOD) had been considering deploying one of its THAAD systems to South Korea since 2014. As the threat of North Korean ballistic missiles appeared to intensify, the United States and South Korea began examining how to improve their BMD capabilities to defend South Korea and U.S. forces stationed there. The United States urged South Korea to develop or procure advanced BMD capabilities and to ensure that they become more interoperable with U.S. and allied BMD systems in the region. There are signs that some U.S. officials would prefer an integrated system. In 2014, the Vice Chairman of the U.S. Joint Chiefs of Staff, Admiral James "Sandy" Winnefeld, stated that a regional missile defense system would be more effective against North Korean missile launches and would share the burden of defense among allies. However, Washington and Seoul initially settled on a policy of interoperability rather than integration. Seoul was resistant to the concept of a regional integrated BMD system for several reasons: the desire, especially strong among progressive Koreans, for more strategic autonomy; a reluctance to irritate China, which had consistently voiced opposition to U.S. BMD deployments; and a disinclination to cooperate with Japan due to poor relations based on disputes over historical and territorial issues.

South Korea has placed an emphasis on indigenous development of high-technology defense systems. South Korea is developing its own missile defense system, called Korea Air and Missile Defense (KAMD), which could be compared to the U.S.-produced PAC-2—a second-generation Patriot air defense system. KAMD would be interoperable with alliance systems and could gradually incorporate more advanced BMD equipment as those elements are procured. In 2015, Korea's Ministry of National Defense announced a budget of $703 million to develop KAMD and Kill Chain—a missile system designed to detect, target, and destroy DPRK military installations—within the next 10 years. The ROK Navy has three destroyers with Aegis tracking software that could be upgraded but no missile interceptors, and the ROK Army fields PAC-2 interceptors. South Korea reportedly plans to upgrade PAC-2 systems in Seoul to PAC-3 versions by 2022. ROK contracted Raytheon to upgrade its Patriot Air and Missile Defense System batteries for $770 million in March 2015. A PAC-3 interceptor unit was briefly transferred from U.S. Forces Japan to Gunsan, North Jeolla Province, in South Korea for joint training drills with ROK units in July 2016.

After the North Korean satellite launch in February 2016, U.S. and ROK officials made a joint statement that the allies would examine the deployment of THAAD to South Korea, prompting harsh reactions from China and Russia. China complained that the THAAD system's powerful X-band radar could be configured to allow the United States to monitor airspace deep into Chinese territory, and some Chinese analysts believe that the radar could, in combination with other BMD upgrades, place the United States in a position to nullify China's strategic nuclear deterrent. The Chinese ambassador to Seoul reportedly warned in February 2016 that the China-ROK relationship could be "destroyed in an instant" if the United States places THAAD in South Korea. South Korean officials and politicians have protested China's posture, defending the utility of the BMD system for intercepting North Korean missiles.

The Relocation of U.S. Forces Korea (USFK)

The planned realignment of all U.S. forces from bases near the demilitarized zone (DMZ) border with North Korea to bases farther south is progressing after initial delays, but challenges with USFK force posture remain. Troop levels remain at about 28,500. The realignment plan reflects the shift toward a supporting role for USFK and a desire to resolve the issues arising from the location of the large U.S. Yongsan base in downtown Seoul. 2017 is anticipated to be a year of major movement of personnel to the new base in Pyeongtaek.

The USFK base relocation plan has two elements. The first involves the transfer of a large percentage of the 9,000 U.S. military personnel at the Yongsan base to U.S. Army Garrison (USAG) Humphreys, which is located near the city of Pyeongtaek some 40 miles south of Seoul. The second element involves the relocation of about 10,000 troops of the Second Infantry Division from the demilitarized zone to areas south of the Han River (which runs through Seoul). The end result would be that USFK sites will decline to 96, from 174 in 2002. The bulk of U.S. forces will be clustered in the two primary "hubs" of Osan Air Base/USAG Humphreys and USAG Daegu that contain five "enduring sites" (Osan Air Base, USAG Humphreys, USAG Daegu, Chinhae Naval Base, and Kunsan Air Base). U.S. counter-fires (counter-artillery) forces stationed near the DMZ are the exception to this overall relocation. The United States and South Korea agreed that those U.S. units would not relocate to USAG Humphreys until the South Korean counter-fires reinforcement plan is completed around 2020. The city of Dongducheon, where those soldiers are based, has protested this decision and withdrawn some cooperation with the U.S. Army.

The relocations to Pyeongtaek originally were scheduled for completion in 2008, but have been postponed several times because of the slow construction of new facilities at Pyeongtaek and South Korean protests of financial difficulties in paying the ROK share of the relocation costs. The commander of USFK stated that 65% of the relocation program was complete as of the end of 2015, and that "the majority of unit relocations will occur through 2018." The original cost estimate was over $10 billion; South Korea was to contribute $4 billion of this. Estimates in 2010 placed the overall costs at over $13 billion. In congressional testimony in April 2016, a U.S. official stated that South Korea is funding 91% of the total $10.7 billion cost of USFK relocations. U.S. Ambassador Mark Lippert testified to Congress in June 2014 that the Humphreys Housing Opportunity Program (privately developed housing for servicemembers and their families inside the base) was a "challenging issue" and that the Defense Department was reexamining housing plans at USAG Humphreys. In 2013, USFK broke ground for the new headquarters of the U.S.-Korea Command (KORCOM) and United Nations Command (UNC) in Pyeongtaek. The facility is to become the command center for U.S. forces after the planned transfer of wartime operational control.

Tour Normalization Debate and Rotation of Army Units to South Korea86

Another complicating factor in the development of the Yongsan Relocation Plan is the announcement by the Pentagon in 2008 that U.S. military families, for the first time, would be allowed to join U.S. military personnel in South Korea. Most U.S. troops in South Korea serve one-year unaccompanied assignments. The goal was to phase out one-year unaccompanied tours in South Korea, replacing them with 36-month accompanied or 24-month unaccompanied tours. Supporters of the plan argued that accompanied tours create a more stable force because of longer, more comfortable tours. If implemented, the "normalization" of tours would increase the size of the U.S. military community at Osan/Humphries near Pyeongtaek to over 50,000.

Some Members of Congress raised strong concerns about existing plans to relocate U.S. bases in South Korea and normalize the tours of U.S. troops there. In 2011, the Senate Armed Services Committee (SASC) passed amendments to the FY2012 National Defense Authorization Act that prevent the obligation of any funds for tour normalization until further reviews of the plan are considered and a complete plan is provided to Congress. The National Defense Authorization Act for Fiscal Year 2013 ( H.R. 4310 / P.L. 112-239 ) included a provision (Section 2107) that continues to prohibit funds for tour normalization. Since 2013, at least, the DOD has "stopped pursuing Tour Normalization as an initiative for Korea." In 2013, USFK released a statement saying, "while improvements to readiness remain the command's first priority, tour normalization is not affordable at this time." A 2013 SASC report criticized the policy change as expensive and questioned the legality of how DOD calculated the housing allowance.

In October 2013, the U.S. Army began a program of rotating units to South Korea for a nine-month tour of duty in lieu of having selected combat units permanently based in South Korea. Some defense analysts have raised concerns about the cost and the effectiveness of rotational forces vis-a-vis permanently assigned forces. Those favoring permanently assigned forces cite the benefits of having greater familiarity and experience with the challenging and complex terrain in South Korea as well as its unique climatic conditions. Another perceived benefit of permanently assigned forces is the opportunity they provide to develop long-term relationships with South Korean military counterparts. On the other hand, the Army suggests there are benefits of employing rotational forces in lieu of permanently assigned units. Noting troops are typically stationed in South Korea for one- or two-year tours, Army officials reportedly suggest this leads to frequent turnover of personnel in permanently assigned units, detracting from unit cohesion and impacting a unit's effectiveness. In the case of rotational units, they typically arrive in Korea shortly after a deployment to a Combat Training Center at a high state of readiness and without having to contend with the significant turnover of Korea-assigned units. Army officials suggest that the advantages of rotational units outweigh their initial unfamiliarity with the terrain, climate, and their South Korean counterparts.

Cost Sharing

Since 1991, South Korea has provided financial support through a series of Special Measures Agreements (SMAs) to offset the cost of stationing U.S. forces in Korea. In January 2014, Seoul and Washington agreed to terms for the next five-year SMA, covering 2014-2018. Under the new agreement, Seoul will raise its contribution by 6% to 920 billion Korean won ($867 million) in 2014 and then increase its annual payments at the rate of inflation. According to congressional testimony by General Vincent Brooks, South Korea paid 932 billion won ($824 million) in 2015 and 944 billion won ($821 million) in 2016, equal to about 50% of the total nonpersonnel costs of U.S. troop presence on the peninsula. In addition, South Korea is paying $9.74 billion for the relocation of several U.S. bases within the country and construction of new military facilities.

The new SMA makes U.S. use of South Korean funds more transparent than in the past, in response to South Korean criticism. The ROK Ministry of Defense must approve every contract for which SMA funds are obligated, and USFK is to submit an annual report on the SMA funds to the co-chairs of the Korea-U.S. Integrated Defense Dialogue (KIDD). Even with these changes, Korean then-opposition lawmakers in the Minjoo's predecessor party that now is in the majority complained that the agreement is "humiliating" and that USFK might use SMA funds to finance portions of the relocation plan (see above) in violation of the 2004 agreement.

Opcon Transfer

The United States has agreed to turn over the wartime command of Korean troops to South Korea, but the two sides have postponed this transfer for several years. Under the current command arrangement, which is a legacy of U.S. leadership of the U.N. coalition in the 1950-1953 Korean War, South Korean soldiers would be under the command of U.S. forces if there were a war on the peninsula. The plan to transfer wartime operational control recognizes South Korea's advances in economic and military strength since the Korean War and is seen by many Koreans as important for South Korean sovereignty. Progressive parties in South Korea generally support hastening the transition, arguing that the U.S. presence influences North Korea to accelerate its military buildup.

Under a 2007 agreement, the U.S.-ROK Combined Forces Command (CFC), which has been headed by the U.S. commander in Korea, is to be replaced with separate U.S. and ROK military commands; the provisional name of the new U.S. command is Korea Command (KORCOM). When the U.S. and ROK militaries operate as a combined force under the new command structure, U.S. forces may be under the operational command of a Korean general officer, but U.S. general officers are to be in charge of U.S. subcomponents. A bilateral Military Cooperation Center would be responsible for planning military operations, military exercises, logistics support, and intelligence exchanges, and assisting in the operation of the communication, command, control, and computer systems. It is unclear what role the U.N. Command, which the USFK Commander also holds, will have in the future arrangement.

In 2014, South Korea's Minister of Defense reportedly announced that the goal was to transfer Opcon in 2023, stressing the completion of the Korean Air and Missile Defense System (KAMD) by 2020 as an important step in the transfer process. To that effect, the Ministry of Defense announced that $1.36 billion would be invested in the KAMD system in 2017. In 2010, the Opcon transfer was postponed to 2015 after a series of provocations from North Korea and amid concerns about whether South Korean forces were adequately prepared to assume responsibility. As the new deadline of 2015 grew closer, concerns again emerged about the timing. Reportedly, South Korean officials worried that their military was not fully prepared to cope with North Korean threats and that Pyongyang might interpret the Opcon transfer as a weakening of the alliance's deterrence. Some military experts expressed concern that turning over control would lead to the United States reducing its overall commitment to South Korean security. In October 2014, the United States and South Korea announced in a joint statement that the allies would take a "conditions-based approach" to the Opcon transfer and determine the appropriate timing based on South Korean military capabilities and the security environment on the Korean Peninsula. The decisions to delay the Opcon transfer could be interpreted as flexible adjustments to changed circumstances on the Korean Peninsula or as emblematic of problems with following through on difficult alliance decisions.

In testimony to Congress in April 2015, then-USFK Commander General Curtis Scaparrotti explained the three general conditions for Opcon transfer:

South Korea must develop the command and control capacity to lead a combined and multinational force in high-intensity conflict, South Korea must improve its capabilities to respond to the growing nuclear and missile threat in North Korea, and the Opcon transition should take place at a time that is conducive to a transition.

Scaparrotti stated that main areas of attention for improving South Korea's capabilities will be C4 (command, control, computers, and communication systems), BMD, munitions, and ISR (intelligence, surveillance, and reconnaissance) assets. Reportedly, the Opcon transfer may not occur until 2020 or later. South Korea's Ministry of National Defense (MND) 2016 White Paper says that the MND will do its utmost to fulfill all necessary requirements to facilitate Opcon transfer by the mid-2020s by making progress toward being able to lead alliance military drills and organizing the potential future headquarters for the ROK-U.S. Combined Forces Command (CFC) after the transfer is complete.

South Korean Defense Industry and Purchases of U.S. Weapon Systems

South Korea is a major purchaser of U.S. weapon systems and is regularly among the top customers for Foreign Military Sales (FMS). From 2008 to 2016, ROK FMS contracts with the US totaled $15.7 billion, and commercial acquisitions totaled $6.9 billion for a total of $22.5 billion in acquisitions during that time period. Although South Korea generally buys the majority of its weapons from the United States, European and Israeli defense companies also compete for contracts; Korea is an attractive market because of its rising defense expenditures. From 2008 to 2016, approximately 75% of South Korea's total foreign defense purchases have come in the form of FMS and commercial sales from U.S. companies.

South Korea is to purchase the Lockheed Martin F-35 Joint Strike Fighter to be its next main fighter aircraft, after the Ministry of National Defense (MND) in September 2013 threw out the yearlong acquisition process that selected the Boeing F-15SE fighter. The cost of the F-35 had been too high for the original bid, according to reports, but Korean defense officials determined that only the F-35 met their requirements for advanced stealth capability. South Korea is to purchase 40 F-35 fighters at a total cost of $7.83 billion, with the first delivery of aircraft scheduled for 2018. The transfer of advanced defense technologies to South Korea was a key incentive in the contract with Lockheed Martin, according to reports, but the U.S. government denied the transfer of several technologies that the MND had been expecting to use in its own KF-X fighter development program. The inability to secure the transfer of these four cutting-edge technologies from the United States became a minor scandal in South Korea in October 2015 and led former President Park's top security advisor to resign. According to a 2013 article in Foreign Policy , U.S. officials were concerned that South Korea was exploiting U.S. defense technology in its indigenously produced equipment, and these concerns may have been a factor in the decision to deny the transfer of advanced electronic scanner array (AESA) technology.

South Korea is to also purchase four RQ-4 "Global Hawk" unmanned aerial vehicles (UAVs) at a price of $657 million in total. Given concerns that the sale could violate the Missile Technology Control Regime (MTCR) and nonproliferation norms, observers called on the Obama Administration to ensure that the Global Hawks are used strictly for reconnaissance and are not armed. Currently, the South Korean military operates reconnaissance UAVs; the MND budgeted $447 million to indigenously develop a combat UAV by 2021.

Korea's Defense Reform 2020 initiative emphasizes the development of indigenous capabilities by increasing the percentage of funds allocated to defense research and development (R&D). For example, South Korea's Defense Acquisition Program Administration (DAPA) announced in 2016 that government funding will be provided for industries that focus on the development of essential parts for weapons systems. The defense spending increase is also tied to South Korean strategic objectives, including a three-axis defense plan that seeks to integrate Korea Air and Missile Defense (KAMD), Kill Chain, and the Korea Massive Punishment and Retaliation (KMPR) plan with USFK systems and capabilities. South Korea aims to improve the competitiveness of its defense industry, but reported problems with the reliability of certain systems pose a challenge; South Korean firms compete internationally in the armored vehicle, shipbuilding, and aerospace industries. Lockheed Martin and Korea Aerospace Industries jointly developed the T-50 Golden Eagle, a trainer and light fighter aircraft that has been successful on the international market and will likely compete for the U.S. Air Force's next trainer aircraft contract.

Southeast Asia is considered to be a major market for South Korean defense equipment. Recent international arms sales include 12 FA-50 light aircraft sold to the Philippines for $420 million, three diesel electric attack submarines sold to Indonesia for $1.1 billion, a frigate sold to Thailand for $486 million, and six missile surface corvettes sold to Malaysia for $1.2 billion.

The 110 th Congress passed legislation that upgraded South Korea's status as an arms purchaser from a Major Non-NATO Ally to the NATO Plus Three category ( P.L. 110-429 ), which has become NATO Plus Five. This upgrade establishes a higher dollar threshold for the requirement that the U.S. executive branch notify Congress of pending arms sales to South Korea, from $14 million to $25 million. Congress has 15 days to consider the sale and take legislative steps to block the sale compared to 30 days for Major Non-NATO Allies.

South Korea's Regional Relations

Looking at their surrounding neighborhood, South Koreans sometimes refer to their country as a "shrimp among whales." South Korea's relations with China and Japan, especially the latter, combine interdependence and rivalry. Until 2013, trilateral cooperation among the three capitals generally had been increasing, particularly in the aftermath of the 2008 global financial crisis. Between 2009 and 2012, leaders of the three countries met annually in standalone summits, established a trilateral secretariat in Seoul, signed an investment agreement, and laid the groundwork for trilateral FTA negotiations to begin. In 2013, however, tensions between South Korea and Japan and between China and Japan froze much of this burgeoning trilateral cooperation. This hiatus lasted until November 2015, when the three countries resumed their trilateral leaders' meetings in Seoul. Japan is to host the next such gathering. Even during the freeze, the three countries continued their trilateral FTA negotiations, which were launched in November 2012.

South Korea-Japan Relations

South Korea's relations with Japan, strained since 2012, improved modestly in 2015, due in large measure to Japanese Prime Minister Shinzo Abe's avoidance of flagrantly inflammatory actions or statements on historical issues, the strength of the U.S.-Japan relationship, and former President Park's decision to relax her previous linkage between the Japanese government treatment of history issues and Seoul's willingness to participate in most forms of high-level bilateral activities. Park responded to Prime Minister Abe's August 2015 statement commemorating the end of World War II by expressing disappointment that Abe "did not quite live up to our expectations," but also by speaking somewhat positively about other aspects of his statement.

Tensions between South Korea and Japan limit U.S. policy options in Northeast Asia and periodically cause difficulties between Washington and one or both of its two allies in Northeast Asia. Seoul and Tokyo disagree over how Imperial Japan's actions in the early 20 th century should be handled in contemporary relations. The relationship is also challenged by conflicting territorial claims and strategic and economic competition. The ongoing opportunity costs to the United States have led some policy analysts to call for the United States to become more directly involved in trying to improve relations between South Korea and Japan.

U.S. policymakers have long encouraged enhanced South Korea-Japan relations. A cooperative relationship between the two countries, both U.S. treaty allies, and among the three is in U.S. interests because it arguably enhances regional stability, helps coordination over North Korea policy, and boosts each country's ability to deal with the strategic challenges posed by China's rise. However, despite increased cooperation, closeness, and interdependence between the South Korean and Japanese governments, people, and businesses over the past decade, mistrust on historical and territorial issues continues to linger. South Korea and Japan have competing claims to the small Dokdo/Takeshima islands in the Sea of Japan (called the East Sea by Koreans), and most South Koreans complain that Japan has not adequately acknowledged its history of aggression against Korea. For more than three generations beginning in the late 19 th century, Japan intervened directly in Korean affairs, culminating in the annexation of the Korean peninsula in 1910. Over the next 35 years, Imperial Japan all but attempted to subjugate Korean culture. Among the victims were tens of thousands of South Korean "comfort women" who during the 1930s and 1940s were recruited, many if not most by coercive measures, into providing sexual services for Japanese soldiers. Whenever South Koreans perceive that Japanese officials are downplaying or denying this history, it becomes difficult for South Korean leaders to support initiatives to institutionalize improvements in bilateral ties.

South Koreans' interest in forming significant new institutional arrangements with Japan is dampened by three domestic factors in South Korea. First, continued suspicions of Japan among the South Korean population place political limitations on how far and how fast Korean leaders can improve relations. Second, ongoing disagreements over Dokdo/Takeshima's sovereignty continue to weigh down the relationship. Third, unlike Japan, South Korea generally does not view China as an existential challenge and territorial threat. South Korea also needs Chinese cooperation on North Korea. Accordingly, South Korean leaders tend to be much more wary of taking steps that will alarm China. A factor that could change this calculation is if China is seen as enabling North Korean aggression and/or undermining South Korea's efforts to defend itself against the DPRK. North Korean acts of provocation are often followed by breakthroughs in ROK-Japan relations, as well as in ROK-U.S.-Japan cooperation.

South Korea-China Relations

China's rise influences virtually all aspects of South Korean foreign and economic policy. North Korea's growing dependence on China, which has accounted for over 60% of North Korea's trade with the world since 2011, has meant that South Korea must increasingly factor Beijing's actions and intentions into its North Korea policy. China's influence over North Korea has tended to manifest itself in a number of ways in Seoul. For instance, Chinese support or opposition could be decisive in shaping the outcome of South Korea's approaches to North Korea, both in the short term (such as handling sudden crises) and the long term (such as contemplating how to bring about reunification). For this reason, a key objective of the joint Park/Obama policy toward North Korea was trying to alter China's calculation of its own strategic interests so that they might be more closely aligned with Seoul and Washington rather than with Pyongyang. Additionally, many South Koreans worry that China's economy is pulling North Korea, particularly its northern provinces, into China's orbit.

On the other hand, China's continued support for North Korea, particularly its perceived backing of Pyongyang after the Yeonpyeong Island shelling in 2010, has angered many South Koreans, particularly conservatives. China's treatment of North Korean refugees, many of whom are forcibly repatriated to North Korea, has also become a bilateral irritant. Many South Korean conservatives also express concern that the Chinese have been unwilling to discuss plans for dealing with various contingencies involving instability in North Korea, though beginning in 2013 there were signs that Beijing had become more willing to engage in these discussions. Park Geun-hye called for establishing a trilateral strategic dialogue among South Korea, the United States, and China that presumably could discuss various situations involving North Korea. Since China's 2001 entry into the World Trade Organization, China has emerged as South Korea's most important economic partner. Over 20% of South Korea's total trade is with China, twice the level for South Korea-U.S. and South Korea-Japan trade. For years, China has been the number one location for South Korean firms' foreign direct investment, and the two countries signed a bilateral FTA in 2015. Yet, even as China is an important source of South Korean economic growth, it also looms large as an economic competitor. Fears of increased competition with Chinese enterprises have been an important motivator for South Korea's push to negotiate a series of FTAs with other major trading partners around the globe.

South Korean officials generally are reluctant to raise objections in public about Chinese behavior that does not directly affect South Korea. This can be seen in South Korea's response to Chinese increased assertion of maritime claims in the South and East China Seas. During the Obama Administration, U.S. officials, including President Obama, called on South Korea to be more vocal about China's series of assertive actions in the South China Sea. In fall 2015, the South Korean defense minister and foreign minister made the first public comments by cabinet officials that were seen to be obliquely critical of China's actions in the South China Sea.

One factor that may have convinced South Korea to become more vocal on this issue may have been increased tensions between Seoul and Beijing over competing claims to fishing rights in the Yellow Sea. In 2016, the number of Chinese fishing vessels operating in waters claimed by the two Koreas, as well as in South Korea's undisputed exclusive economic zone (EEZ), reportedly increased dramatically from dozens of vessels to hundreds. South Korean fishermen blame a precipitous drop in South Korea's 2016 crab catch on the increase, and argue that the Chinese fishing boats use nonsustainable methods that damage spawning grounds. Moreover, by prompting increased patrols in the area by both Koreas, the expanded presence of Chinese fishing vessels increases the chances of an unintended collision or skirmish between South Korean and North Korean coast guard or naval vessels attempting to police the area, particularly around the Northern Limit Line (NLL) that South Korea says is the maritime boundary between the two Koreas. According to one 2016 report, North Korea had sold fishing rights to Chinese fisherman to raise foreign currency. In June 2016, the United Nations Command (UNC)—which operates under a U.S. commander—announced that it would conduct joint patrols with South Korea to enforce the 1953 armistice's restrictions on illegal fishing in the Han River Estuary. Reportedly this was the first time the UNC and South Korea had conducted joint operations in the area. Clashes—including collisions, sinkings, and deaths—between South Korean coast guard vessels and Chinese fishing boats appear to have increased over the course of 2016, creating bilateral friction.

In late 2016 and early 2017, criticisms of China within South Korea mounted on the back of widespread perceptions that China is imposing economic penalties on South Korean companies as a consequence of Seoul's decision to deploy THAAD. In one early 2017 public opinion poll, China's favorability rating among South Koreans fell below Japan's, a rare phenomenon. In early March 2017, then-candidate Moon called on Beijing to "immediately stop" its "excessive retaliation."

Economic Relations

South Korea and the United States are major economic partners. In 2016, two-way goods and services trade between the two countries totaled $145 billion ( Table 1 ), making South Korea the United States' seventh-largest trading partner. For some western states and U.S. sectors, the South Korean market is even more important. South Korea is far more dependent economically on the United States than the United States is on South Korea. In terms of goods trade, in 2016, the United States was South Korea's second-largest trading partner, second-largest export market, and third-largest source of imports. In 2013, it was among South Korea's largest suppliers of and destinations for foreign direct investment (FDI).

As South Korea has emerged as a major industrialized economy, and as both countries have become more integrated with the world economy, economic interdependence has become more complex and attenuated. In particular, the United States' economic importance to South Korea has declined relative to other major powers. In 2003, China for the first time displaced the United States from its perennial place as South Korea's number one trading partner. Japan and the 28-member European Union each also rival and have at times surpassed the United States as South Korea's second-largest trading partner. On the other hand, South Korea's position among U.S. trading partners has been relatively consistent over the past two decades.

South Korea's export-driven economy and competition with domestic U.S. producers in certain products has led to some trade friction with the United States. For example, imports of certain South Korean products—mostly steel or stainless steel items as well as polyester, chemicals, and washing machines—have been the subject of U.S. antidumping and countervailing duty (AD/CVD) investigations. As of June 28, 2017, for instance, antidumping duties were being collected on 21 South Korean imports, and countervailing duties were being assessed on 7 South Korean products. The Trump Administration has also taken broader new or relatively less-used actions on imports, which may affect U.S. trade with South Korea. The Administration may self-initiate some AD/CVD cases without petitions by industry, which could increase their frequency. In addition, the Administration has begun trade investigations under Section 232 of the Trade Expansion Act of 1962, as amended, which will examine the impact of U.S. imports of steel, among other products, on national security, and could result in the imposition or increase of tariffs on these products. South Korea is a top supplier of U.S. steel imports.

Five Years of the KORUS FTA

For five years, the KORUS FTA has been the centerpiece of U.S.-South Korean trade and economic relations. Although the agreement was initiated in 2006 and signed in 2007 under the George W. Bush and Roh Moo-hyun Administrations, implementing legislation was not submitted to and passed by Congress until 2011. This followed an exchange of letters between the Obama and Lee Myung-bak Administrations that effectively made certain modifications to the original agreement, relating to auto and agricultural trade. In March 2012, the U.S.-South Korea FTA entered into force.

Upon implementation, 82% of U.S. tariff lines and 80% of South Korean tariff lines were tariff free in U.S.-South Korean trade, whereas prior to the KORUS FTA, 38% of U.S. tariff lines and 13% of South Korean tariff lines were duty free. By the 10 th year of the agreement, the figures are to rise to an estimated 99% and 98%, respectively, with tariff elimination occurring in stages and the most sensitive products having the longest phase-out periods. Six rounds of tariff cuts have occurred to date. The agreement also has arguably the "highest-standards" of any U.S. FTA currently in force, including commitments ensuring financial services firms' ability to transfer data between the two countries, a precursor to the Trans-Pacific Partnership's (TPP's) much-lauded digital trade commitments. Nontariff barriers in goods trade and barriers in services trade and foreign investment have and will continue to be reduced or eliminated under the KORUS FTA. The third stage of South Korea's market opening to legal services, the commitment to allow U.S. firms to enter into joint ventures in South Korea, became effective in March 2017.

Total trade in goods and services between the two countries has grown with U.S. exports rising from $61.9 billion in 2011 to $63.8 billion in 2016, and imports rising from $67.3 billion to $81.4 billion during the same period ( Table 1 ). Foreign direct investment (FDI) between both countries has also grown with the stock of South Korean FDI in the United States more than doubling, growing from $19.9 billion in 2011 to $40.9 billion in 2016. U.S. FDI abroad into South Korea grew more modestly from $28.1 billion to $39.1 billion.

Reviews of the agreement to date are mixed. Proponents argue that KORUS has enhanced competition and consumer choice in both countries, increased protection of U.S. intellectual property in South Korea, and improved the transparency of the South Korean regulatory process. They also contend that lower import restrictions in South Korea have increased U.S. exports of certain products. U.S. beef exports, for example, have increased from $649 million in 2011 to just over $1 billion in 2016, as the South Korean beef tariff has fallen from 40% to 24% and will continue declining to zero by 2026. U.S. auto exports have nearly doubled from $1.1 billion in 2011 to $2.2 billion in 2016, such that the United States now exports more cars to South Korea than to Japan, a country with more than twice South Korea's population and a larger GDP/capita. South Korea's auto tariff was reduced from 8% to 4% upon KORUS's entry into force and eliminated in 2016. U.S. exports of services also have increased by nearly $5 billion since the agreement became effective.

Others argue that the agreement's impact is disappointing, pointing to an increase in the U.S. trade deficit with South Korea since KORUS's entry into force. Despite increased exports in certain products, total U.S. exports to South Korea have not fluctuated much since 2011, while imports have grown by more than 20%, causing the overall trade deficit to increase. The bulk of this growth in the trade deficit stems from auto trade. U.S. goods imports from South Korea increased by about $13 billion from 2011 to 2016, with auto imports alone accounting for almost $9 billion of the increase ($12 billion to $21 billion). Under KORUS, the 2.5% U.S. car tariff remained in place until January 2016 at which time it was eliminated for most types of cars. Although both U.S. exports and imports of autos have roughly doubled over the period, U.S. exports increased from a much lower base.

Attributing changes in trade flows (both U.S. exports and imports) to the KORUS FTA is difficult. Price changes due to tariff reductions are only one of a number of factors affecting trade. Other factors include fluctuations in the business cycle and growth rates, exchange rates, and the level of aggregate demand. In addition, some provisions of the agreement have yet to take effect and tariffs on certain products continue to phase out. In dollar terms, South Korean goods imports from each of its top three trading partners (China, Japan, and the United States) have declined or been flat since 2011, suggesting slower rates of economic growth in South Korea during that period played a significant role in South Korea's import patterns and hence the growth in the U.S. trade deficit. Using data from 2015, the U.S. International Trade Commission estimated that without the agreement in place, the U.S. bilateral trade deficit with South Korea would have been even larger.

The Trump Administration has repeatedly criticized the KORUS FTA. In its 2017 Trade Agenda, the Administration noted that the rise in the U.S. trade deficit since the agreement's entry into force "is not the outcome the American people expected from that agreement." Vice President Pence, during a visit to South Korea in April, raised concerns over the deficit and continued barriers in the South Korean market and spoke of reforming the KORUS FTA. In remarks during the recent bilateral summit, the President noted that the FTA had been "a rough deal for the United States," and that "we are renegotiating a trade deal right now as we speak with South Korea."

While it is clear that the Trump Administration would like to take measures to decrease the bilateral trade deficit and is examining the KORUS FTA commitments to that effect, there is considerable ambiguity over what, if any, specific aspects of the KORUS FTA may be considered for renegotiation. The Administration has called for the convening of a special session of the Joint Committee under the agreement "to consider matters affecting the operation of the Agreement, including possible amendments and modifications." However, Congress would play a major role in any official renegotiation, as the Chairmen and Ranking Members of the trade committees of jurisdiction have stated in a letter to the Administration. To date the Administration has not notified Congress of its intent to begin negotiations regarding the KORUS FTA. This may signal a limited scope for these Joint Committee talks.

The Trump Administration has highlighted the deficit in its call for this special session of the Joint Committee. Most economists, however, argue that trade agreement provisions are unlikely to have a significant effect on the trade balance, as bilateral trade deficits generally reflect broader macroeconomic factors. The Administration has also initiated two related investigations on U.S. trade deficit partners and existing U.S. trade agreements, both of which include South Korea. The outcomes of these investigations may inform any potential renegotiation of the KORUS FTA.

Another likely focus of the Joint Committee session is South Korea's implementation of its KORUS FTA commitments as this has been an ongoing concern in the bilateral trade relationship. Some in the business community argue that South Korea was slow to implement aspects of the agreement and in some instances has failed to comply with the spirit of the KORUS FTA even if it is adhering to its precise commitments. Exporters, particularly in the first years of the agreement, complained that the Korean Customs Service required overly onerous origin verifications. A number of South Korean auto regulations, including on emission standards and most recently repair processes and information disclosure, have also caused concern among U.S. companies regarding the treatment of imported versus domestic products.

In a March 2016 letter to the South Korean Ambassador, Senate Finance Committee Chairman Orrin Hatch raised some of these issues, as well as concerns with the implementation of commitments on data flows, transparency and predictability of pricing and reimbursements of pharmaceuticals and medical devices, and U.S. firms' abilities to invest in and operate with South Korean law firms. In its 2017 report on foreign trade barriers, the USTR noted industry group claims that the Korean Fair Trade Commission (KFTC), South Korea's competition enforcement agency, has unfairly targeted foreign firms in recent antitrust enforcement activities, a potential violation of KORUS FTA obligations on nondiscriminatory treatment. Despite these challenges with implementation of the agreement, many in the business community emphasize that the FTA provides a formal venue to address bilateral frictions. Through this process and through other forms of engagement, the U.S. government has argued that it has been able to successfully resolve many of the challenges raised.

South Korea's Economic Performance

South Korean firms rely heavily on international markets, with exports in recent years accounting for roughly half of South Korean GDP. This level of integration makes the country particularly susceptible to fluctuations in the global economy, as seen during the global financial crisis that began in 2008. South Korea's real GDP growth declined to 0.7% in 2009 as the world economy dipped into deep recession. Growth recovered to 6.5% in 2010, following the government's large fiscal stimulus and record-low interest rates, and has hovered around 3% since (see Figure 3 ). However, South Korea remains vulnerable to a slowdown in its major export markets: China, the United States, the European Union, and Japan. The government has used a mixture of monetary and fiscal stimulus over the past several years to support the domestic economy. Most recently, in June 2016, the former Park government announced a $17 billion stimulus package. The same month, the Bank of Korea cut South Korea's base interest rate to a record-low 1.25%, where it has remained since, citing continued decline in exports and weak domestic demand.

South Korea's post-2008-crisis average growth of around 3% is two percentage points lower than its 5% average during the decade leading up to the crisis. This lower growth is a major policy concern for South Korea, especially given the country's rapid economic success over the past several decades. Many economists argue that the South Korean economy would benefit from a number of structural reforms, such as attempts to spur the productivity of the services sector, which lags behind the manufacturing sector in the Korean economy. Another item on the potential reform agenda is the removal of labor market rigidities, which have created an incentive for South Korean companies to hire easily fired temporary workers rather than highly protected full-time employees with benefits packages. The Park government attempted to address some of these issues through its reform initiatives to varying effect, but disagreements among the South Korean government, industry, and union leaders over the nature of labor reforms stalled the process.

Slower economic growth has exacerbated longstanding tensions in South Korea over inequality and privileges of the elite class. These factors may also have played a role in the South Korean public's outrage at the presidential corruption scandal, which included allegations of special treatment for individuals associated with the Park Administration. The activities and employment patterns of South Korea's large conglomerates (called chaebol ) also contribute to narratives about inequality, as the chaebol employ a small share of South Korea's population despite producing an outsized share of the country's GDP. Chaebol leaders are also sometimes described by critics as behaving as though they are above the law with several involved in various corruption charges, including the recent indictment of Samsung's head, Lee Jae-yong, over charges of bribery to the Park Administration. Fiscal measures to address inequality face a number of headwinds. South Korea has one of the lowest rates of social welfare spending in the industrialized world, highly indebted average households, and a rapidly aging population that is expected to create additional financial pressures on government expenditures in the future.

Currency Issues

Given its dependence on international trade, South Korea's economy can be significantly affected by fluctuations in currency valuations. The won 's depreciation during the 2008-2009 global financial crisis, when it fell by nearly a third to around 1,500 won per dollar, helped to stimulate South Korea's economic recovery by making its exports cheaper relative to many other currencies, particularly the Japanese yen . A primary concern in more recent years, however, has been the devaluation of the Japanese yen. From mid-2012 to mid-2015 the Japanese yen depreciated against the dollar and the won by roughly 40%, though it has regained some of its value against both currencies since. The yen's devaluation has been in part caused by expansionary monetary policies in Japan, as part of Prime Minister Abe's focus on stimulating the Japanese economy. The yen's fall has boosted Japanese exports and proved politically unpopular with its trade partners, including the United States and South Korea.

Over the years, South Korean exchange rate policies periodically have been a source of consternation in U.S.-South Korea relations, with some observers arguing that South Korea has artificially depressed the value of the won in order to gain a trade advantage by making its exports cheaper in other countries' markets. In its April 2017 report to Congress on exchange rates, the Department of the Treasury estimated that in the second half of 2016, on net South Korea intervened in foreign exchange markets primarily to limit the won's depreciation, selling an estimated $6.6 billion in foreign exchange. The report still urges South Korea to limit its interventions and to be more transparent in its foreign exchange operations (South Korea does not publicly report its interventions in foreign exchange markets) . The report also found South Korea to satisfy two of the three criteria, established in the Trade Facilitation and Enforcement Act of 2015, for more intensive engagement on currency policy by the Treasury Department. South Korea had both a significant trade surplus and material current account surplus with the United States, but it did not satisfy the third criteria of large persistent one-sided intervention in foreign exchange markets.

South Korean Membership in the AIIB

South Korea is a founding member of the Asian Infrastructure Investment Bank (AIIB). The AIIB is a new China-led multilateral development bank consisting of over 50 countries. South Korea's announcement that it intended to join the bank, along with a number of other U.S. allies such as the United Kingdom and Australia, was reportedly done over the objections of the Obama Administration, which opted not to join. The AIIB has generated controversy. Some analysts say it will help Asian countries meet their infrastructure investment needs. However, some analysts and policymakers have raised concerns about the transparency and governance of China-funded development projects and see the AIIB proposal potentially undermining decades of efforts by the United States and others to improve governance, environmental, social, and procurement standards at the multilateral development banks.

Nuclear Energy and Nonproliferation Cooperation

Bilateral Nuclear Energy Cooperation

The United States and South Korea have cooperated in the peaceful use of nuclear energy for nearly 60 years. This cooperation includes commercial projects as well as research and development work on safety, safeguards, advanced nuclear reactors, and fuel cycle technologies. On June 15, 2015, the United States and the Republic of Korea signed a renewal of their civilian nuclear cooperation agreement, known as a "123 agreement." The agreement provides the legal foundation for nuclear trade between the countries; it provides the legal foundation for export licensing. The new agreement's duration is 20 years, after which it automatically will renew for an additional five-year period unless either or both parties choose to withdraw. The two governments initialed the text of the agreement in April 2015. An agreement did not require an affirmative vote of approval from Congress. It entered into force on November 25, 2015, after a mandatory congressional review period. During her October 2015 visit to Washington, DC, former President Park described the civilian nuclear cooperation agreement as one of the three "major institutional frameworks of our alliance," alongside the U.S.-South Korea Mutual Defense Treaty and the KORUS FTA.

The agreement provides for a new high-level bilateral commission (HLBC) where the two sides would review cooperation under the agreement. The HLBC held its most recent meeting in January 2017, in Washington, DC. The commission is to "serve as a senior-level forum to facilitate strategic dialogue and technical exchanges on peaceful nuclear cooperation between the two countries." It provides a discussion forum about "management of spent nuclear fuel, the promotion of nuclear exports and export control cooperation, assurances of nuclear fuel supply, and nuclear security." There are four working groups: spent fuel management, the promotion of nuclear exports and export control cooperation, assured fuel supply, and nuclear security. The HLBC meeting was co-chaired by U.S. Deputy Secretary of Energy Elizabeth Sherwood-Randall and Second Vice Minister of Foreign Affairs Ambassador Ahn Chong-ghee.

Both countries have called the new 123 agreement a success. South Korean Foreign Minister Yun Byung-Se said that the agreement was "future-oriented" and would facilitate "modern and mutually beneficial cooperation." Former U.S. Secretary of Energy Ernest Moniz said that the agreement would solidify the alliance and would "enable expanded cooperation between our respective nuclear industries, and reaffirm our two governments' shared commitment to nonproliferation."

The future of fuel cycle technology in South Korea was a contentious issue during the negotiation of the new Section 123 agreement. The United States has a long-term nonproliferation policy of discouraging the spread of fuel cycle (enrichment and reprocessing) technology to new states. This is because enrichment and reprocessing can create new fuel or material for nuclear weapons. Many South Korean officials and politicians see U.S. policy as limiting South Korea's national sovereignty by requiring U.S. permission (as required under U.S. law) for the use of U.S.-obligated fuel in certain sensitive civilian nuclear activities. The two countries resolved earlier disagreements over these issues. According to a State Department Fact Sheet, the agreement requires "express reciprocal consent rights over any retransfers or subsequent reprocessing or enrichment of material subject to the agreement." However, the agreement does give South Korea advance permission to ship U.S.-obligated spent fuel overseas for reprocessing into mixed-oxide fuel. There are no current plans to do so, but South Korea may consider this option in developing a strategy for managing its growing spent fuel stocks. The agreement allows for enrichment up to 20% of fissile uranium-235 in South Korea, after consultation through the bilateral commission and further written agreement by the United States. This provision was not part of the previous agreement. South Korea does not have an enrichment capability, but was seeking language in the new agreement that would open the door to that possibility. Enrichment at low levels can be used for nuclear fuel. The agreement also includes U.S. fuel supply assurances.

For decades, the United States and South Korea have worked on joint research and development projects to address spent fuel. In the 1990s, the two countries worked intensely on research and development on a different fuel recycling technology (the "DUPIC" process), but this technology ultimately was not commercialized. In the past decade, joint research has centered on pyroprocessing. The Korean Atomic Energy Research Institute (KAERI) is conducting a laboratory-scale research program on reprocessing spent fuel with an advanced pyroprocessing technique. U.S.-South Korean bilateral research on pyroprocessing began in 2002 under the Department of Energy's International Nuclear Energy Research Initiative (I-NERI). R&D work on pyroprocessing was temporarily halted by the United States in 2008, due to the proliferation sensitivity of the technology. In an attempt to find common ground and continue bilateral research, in October 2010 the United States and South Korea began a 10-year Joint Fuel Cycle Study on the economics, technical feasibility, and nonproliferation implications of spent fuel disposition, including pyroprocessing. In July 2013, a new agreement on R&D technology transfer for joint pyroprocessing work in the United States took effect as part of the Joint Fuel Cycle Study.

Spent fuel disposal is a key policy issue for South Korean officials, and some see pyroprocessing as a potential solution. While South Korean reactor-site spent fuel pools are filling up, the construction of new spent fuel storage facilities is highly unpopular with the public. Some officials argue that in order to secure public approval for an interim storage site, the government needs to provide a long-term plan for the spent fuel. However, some experts point out that by-products of spent fuel reprocessing would still require long-term storage and disposal options. Other proponents of pyroprocessing see it as a way to advance energy independence for South Korea.

While some in the Korean nuclear research community have argued for development of pyroprocessing technology, the level of consensus over the pyroprocessing option among Korean government agencies, private sector/electric utilities, and the public remains uncertain. Generally, there appears to be support in South Korea for research and development, but some analysts are concerned about the economic and technical viability of commercializing the technology. While the R&D phase would be paid for by the government, the private sector would bear the costs of commercialization. At a political level, pyroprocessing may have more popularity as a symbol of South Korean technical advancement and the possibility of energy independence. However, other public voices are concerned about safety issues related to nuclear energy as a whole. Others see fuel cycle capabilities as part of a long-term nuclear reactor export strategy, envisioning that South Korea could have the independent ability to provide fuel and take back waste from new nuclear power countries in order to increase its competitive edge when seeking power plant export contracts.

Some analysts critical of the development of pyroprocessing in South Korea point to the 1992 Joint Declaration, in which North and South Korea agreed they would not "possess nuclear reprocessing and uranium enrichment facilities" and are concerned about the impact of South Korea's pyroprocessing on negotiations with the North. Some observers, particularly in South Korea, point out that the United States has given India and Japan consent to reprocess, and argue that they should be allowed to develop this technology under safeguards. Since the technology has not been commercialized anywhere in the world, the United States and the International Atomic Energy Agency (IAEA) are working with the South Korean government to develop appropriate IAEA safeguards should the technology be developed further. Whether pyroprocessing technology can be sufficiently monitored to detect diversion to a weapons program is a key aspect of the Joint Study, which is expected to be concluded in 2020.

South Korean Nonproliferation Policy

South Korea has been a consistent and vocal supporter of strengthening the global nonproliferation regime, which is a set of treaties, voluntary export control arrangements, and other policy coordination mechanisms that work to prevent the spread of nuclear, biological, and chemical weapons and their delivery systems. South Korea destroyed all of its chemical weapons stocks by 2008, under the Chemical Weapons Convention. South Korea is a member of the Nuclear Suppliers' Group (NSG), which controls sensitive nuclear technology trade, and adheres to all international nonproliferation treaties and export control regimes. South Korea also participates in the G-8 Global Partnership, and other U.S.-led initiatives—the Proliferation Security Initiative, the International Framework for Nuclear Energy Cooperation (formerly GNEP), and the Global Initiative to Combat Nuclear Terrorism. South Korea has contributed funds to the United States' nuclear smuggling prevention effort, run by the Department of Energy, the International Atomic Energy Agency (IAEA) voluntary fund and to the Organization for the Prohibition of Chemical Weapons (OPCW) Trust Fund to support the destruction of Syrian chemical weapons.

South Korea is a member of the Non-Proliferation Treaty (NPT) which requires countries to conclude a safeguards agreement with the International Atomic Energy Agency (IAEA). An Additional Protocol (AP) to South Korea's safeguards agreement entered into force as of February 2004. The AP gives the IAEA increased monitoring authority over the peaceful use of nuclear technology. In the process of preparing a more complete declaration of nuclear activities in the country, the Korean Atomic Energy Research Institute (KAERI) disclosed previously undeclared experiments in its research laboratories on uranium enrichment in 2000, and on plutonium extraction in 1982. The IAEA Director General reported on these undeclared activities to the Board of Governors in September 2004, but the Board did not report them to the U.N. Security Council. In response, the Korean government reconfirmed its cooperation with the IAEA and commitment to the peaceful use of nuclear energy, and reorganized the oversight of activities at KAERI. The experiments reminded the international community of South Korea's plans for a plutonium-based nuclear weapons program in the early 1970s under President Park Chung Hee, the father of the current President Park. At that time, deals to acquire reprocessing and other facilities were canceled under intense U.S. pressure, and Park Chung Hee eventually abandoned weapons plans in exchange for U.S. security assurances. The original motivations for obtaining fuel cycle facilities as well as the undeclared experiments continue to cast a shadow over South Korea's long-held pursuit of the full fuel cycle. As a result, since 2004, South Korea has aimed to improve transparency of its nuclear programs and participate fully in the global nonproliferation regime. In addition, the 1992 Joint Declaration between North and South Korea says that the countries "shall not possess nuclear reprocessing and uranium enrichment facilities." Since North Korea has openly pursued both of these technologies, some debate whether South Korea should still be bound by those commitments. Some analysts are concerned that a denuclearization agreement with North Korea could be jeopardized if South Korea does not uphold the 1992 agreement.

South Korea hosted the 2012 Nuclear Security Summit, a forum initiated by President Obama shortly after his inauguration. The South Korean government agreed to host the summit because it fit into the "Global Korea" concept of international leadership and summitry; it was a chance for the South Korean nuclear industry to showcase its accomplishments; and the South Korean government was able to emphasize South Korea's role as a responsible actor in the nuclear field, in stark contrast with North Korea. It was also seen as an important symbol of trust between the U.S. and South Korean Presidents. South Korea continued its leadership in the nuclear security field by chairing the International Atomic Energy Agency's International Conference on Nuclear Security in Vienna in December 2016. South Korea is also cooperating with regional partners to establish a Center for Excellence in Nuclear Security.

South Korean Politics

From 2008 to 2016, South Korean politics were dominated by South Korea's leading conservative party, the Saenuri ("New Frontier") Party (NFP). Saenuri and its predecessor party controlled the legislature for nearly that entire time span, and won the presidency in 2007 and 2012 elections. Park Geun-hye (born in 1952) was elected President in December 2012, becoming not only South Korea's first woman president, but also the first presidential candidate to receive more than half of the vote (she captured 51.6%) since South Korea ended nearly three decades of authoritarian rule in 1988. By law, South Korean presidents serve a single five-year term. Park is the daughter of the late Park Chung Hee, who ruled South Korea from the time he seized power in a 1961 military coup until his assassination in 1979. Park was impeached by the National Assembly in December 2016, on charges of "extensive and serious violations of the Constitution and the law" stemming from a corruption scandal that from October to December brought hundreds of thousands of South Koreans to the streets in weekly anti-Park protests, the largest in the country's history. On the eve of Park's impeachment, her approval ratings fell below 5%. Park, who was arrested in March 2017 on charges of accepting bribes, abuse of power, coercion, and leaking government secrets, was the first South Korean president to be removed from office since democratic elections were instituted in 1988.

A Powerful Executive Branch

Nominally, power in South Korea is shared by the president and the 300-member unicameral National Assembly. Of these, 246 members represent single-member constituencies. The remaining 54 are selected on the basis of proportional voting. National Assembly members are elected to four-year terms. The president and the central bureaucracy continue to be the dominant forces in South Korean policymaking, as formal and informal limitations prevent the National Assembly from initiating major pieces of legislation. In 2016 and 2017, President Park's removal from office and the Choi Soon-sil scandal revived a long-simmering argument that constitutional reform is necessary to reduce the President's powers.

Political Parties

Presently, there are four major political parties in South Korea.

The Minjoo (Democratic) Party is South Korea's largest party and its main progressive party. Minjoo and its predecessor parties have advocated positions that, if adopted, could pose challenges for U.S. Korea policy, including adopting a more conciliatory approach to North Korea and opposing South Korea-Japan agreements over intelligence sharing and the comfort women. Minjoo's surprise victory in April 2016 legislative elections gave it control of the legislature for the first time since 2008. Over the previous eight years, Minjoo's predecessor parties splintered and merged with other parties on multiple occasions, adopting at least three new names in the process. Minjoo's predecessors controlled the Blue House from 1998 to 2008, and the National Assembly from 2004 to 2008. The Liberty Korea Party ( LKP , sometimes translated as the Freedom Korea Party) is a conservative grouping and is South Korea's second-largest party. It was formed in late December 2016 after Park's former Saenuri Party split. The People's Party is South Korea's third-largest grouping and was formed in early 2016 among former Minjoo Party members led by entrepreneur and onetime presidential candidate Ahn Cheol-soo. The People's Party's positions on North Korea tend to lie between the conservative parties and the Minjoo Party, favoring more engagement than the former but tougher measures than the latter. The Bar e un (Righteous) Party is a conservative grouping formed after Saenuri's breakup in 2016. It is composed of many politicians long opposed to Park.

U.S. ties historically have been stronger with South Korea's conservative parties.