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U.S.-South Korea Relations

Fact sheet released by the Bureau of East Asian and Pacific Affairs, February 10, 1997.

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When Japan surrendered at the end of World War II, it was agreed that Japanese troops in Korea would surrender to U.S. forces in the south and to Soviet forces in the north. Subsequent proposals to implement a previously planned trusteeship for Korea were resisted by many Koreans.

On August 15, 1948, the Republic of Korea (R.O.K.) was established in the south following UN-observed elections. Northern Korean authorities refused to allow the UN to carry out elections north of the 38th parallel, and on September 9, 1948, the Democratic People's Republic of Korea (D.P.R.K.) was established in the north. On June 25, 1950, North Korea invaded the Republic of Korea.

Hostilities continued until July 27, 1953, when the military commanders of the North Korean Army, the Chinese People's Volunteers, and the 16-member-nation UN Command (UNC) signed an armistice agreement. Neither the United States nor South Korea is a signatory of the armistice, though both adhere to it through the UNC. No comprehensive peace agreement has replaced the 1953 armistice pact; thus, a condition of belligerency still technically exists on the divided peninsula.

The United States is committed to maintaining peace and stability on the Korean Peninsula and agreed in the 1954 U.S.-R.O.K. Mutual Defense Treaty to help the Republic of Korea defend itself from external aggression. In support of this commitment, the United States currently maintains about 37,000 service personnel in South Korea, including the Army's Second Infantry Division and several Air Force tactical squadrons. To coordinate operations between these units and the 650,000-strong South Korean armed forces, a Combined Forces Command (CFC) was established in 1978. The CFC is headed by Gen. John Tilelli, who also serves as commander in chief of the UNC and the U.S. Forces in Korea (USFK).

Several aspects of the security relationship are changing as the U.S. moves from a leading to a supporting role in the defense of the R.O.K. South Korea has agreed to pay a larger portion of USFK's stationing costs and to promote changes in the CFC command structure. On December 1, 1994, peacetime operational control authority over all South Korean military units then still under U.S. operational control was transferred to the R.O.K. Armed Forces.

Throughout the postwar period, tensions have continued between the Korean governments, although the late 1980s and early 1990s saw some efforts to promote North-South dialogue and better relations. The United States believes that the question of peace and security on the Korean Peninsula is, first and foremost, a matter for the Korean people themselves to decide. The U.S. is prepared to assist in this process if the two sides desire.

A 1991 declaration on the denuclearization of the Korean Peninsula called for a North Korean-South Korean bilateral nuclear inspection and verification regime. Little progress, however, was made between North and South by fall 1992. Meanwhile, the North agreed in 1992 to International Atomic Energy Agency safeguards but then refused certain inspections and threatened to withdraw from the nuclear Non-Proliferation Treaty. This brought North-South progress to an abrupt halt.

The U.S. and D.P.R.K. began bilateral talks in spring 1993, which resulted in a framework agreement signed by representatives of both nations in Geneva on October 21, 1994. This Agreed Framework commits North Korea to freeze its graphite-moderated reactor program, which could be used to produce plutonium for nuclear weapons development. In return, the D.P.R.K. will receive alternative energy, initially in the form of heavy fuel oil, and eventually two proliferation-resistant lightwater reactors (LWR). The agreement also includes provisions for gradual improvement of relations between the U.S. and the D.P.R.K. and commits North Korea to engage in South-North dialogue. A few weeks after the signing of the Agreed Framework, President Kim Young Sam loosened restrictions on South Korean firms desiring to pursue business opportunities with the North. Although North Korea has continued to refuse official overtures by the South, economic contacts appear to be expanding gradually.

In April 1996, President Clinton and R.O.K. President Kim announced a proposal for four-party talks (the U.S., R.O.K., D.P.R.K., and China) with the goal of establishing a permanent peace mechanism to replace the 1953 Military Armistice Agreement. North Korea has said that it is considering the proposal.

Trade and Investment

Over the past 30 years, the Republic of Korea's economic growth has been spectacular, despite the need to maintain a large military (defense expenditures for 1995 accounted for 15% of the government's budget). South Korea, one of the world's poorest countries only a generation ago, is now the United States' seventh-largest trading partner and has the 11th-largest economy in the world. As South Korea approaches the 21st century, its prospects for continued economic success remain strong.

As South Korea's economy has developed, trade has become an increasingly important aspect of the U.S.-South Korean relationship. The economy continues to grow at a rapid pace, but South Korea's balance of trade and current account have recently switched from surplus to deficit, giving rise to some concern in Korea about its fading international competitiveness. South Korea has also run a trade deficit with the United States since 1994. Fluctuations in the value of the South Korean won, slowing worldwide demand for key products, cumulative wage increases, and strong domestic demand, especially for capital equipment, have all contributed to this phenomenon.

The U.S. seeks to improve access to South Korea's expanding market and increase investment opportunities for American business. Although they have met with resistance from within the South Korean bureaucracy, President Kim's economic reform plans mark a dramatic endorsement of a more liberal, market-based economic system. Economic considerations have a high priority in South Korea's foreign policy.

While prospects for long-term growth remain bright, there are several challenges--external and internal--to South Korea's continued economic ascendancy and prosperity. Historically, much of South Korea's prosperity was achieved through strict adherence to an export-driven market model. Today, the country must redefine its role in an environment of increasing economic interdependence shaped by the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). Although tariff rates have been reduced, other trade barriers continue to impede significant progress in opening the South Korean market to foreign products.

Internally, the country is seeking to transform itself from a low wage/low technology producer to a high wage/high technology industrialized nation. The success of this transformation hinges to a great degree on the political success of President Kim's programs of democratization and reform. Departing from a long history of government-led growth, President Kim favors a policy of deregulation and greater reliance on market mechanisms in order to ensure continued growth and prosperity in the future.

South Korean leaders appear determined to manage successfully the complex economic relationship with the United States and to continue to take a more active role in international economic fora as befits Korea's status as a major trading nation. In December 1996, South Korea became a member of the Organization for Economic Cooperation and Development. South Korea seeks to build on its economic accomplishments to increase its regional and global role, including playing an increasingly important part in political and economic activities in the Pacific Rim; the country is a founding member of the Asia-Pacific Economic Cooperation (APEC) forum.

Principal U.S. Officials

Charge d'Affaires--Richard A. Christenson
Counselor for Political Affairs--James Whitlock
Counselor for Economic Affairs-- Kevin Honan (Acting)
Consul General--Kathryn Dee Robinson
Counselor for Commercial Affairs--Jerry Mitchell
Commander in Chief, UNC--Gen. John Tilelli

The U.S. embassy is located at 82 Sejong-Ro, Chongro-Ku, Seoul (tel. 82-2-397-4114; fax 82-2-738-8845). The mailing address is Unit 15550, APO AP 96205-0001. The U.S. Agricultural Trade Office is located at 146-1, Susong-dong, Chongro-Ku, Leema Bldg., Rm. 303, Seoul 110-140 (fax 82-2-720-7921). The U.S. Export Development Office/U.S. Trade Center is c/o U.S. embassy (fax 82-2-739-1628). Its director is Camille Sailer.

[end of document]

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