"This dispute is healthy ... because if you try and address that issue in this KORUS amendment process, it complicates the negotiations," Cutler said at a forum hosted by the Korea Economic Institute of America. "But once again, I think that these two decisions, coupled with an impending decision on steel ... could set a cloud over the negotiations and kind of affect the tone and willingness of both sides to work together enthusiastically to reach an agreement."

Negotiators from the two countries met in Seoul Wednesday for the second round of negotiations. Seoul's chief delegate, Yoo Myung-hee, told reporters after the talks that her team had raised the safeguard issue and would discuss it again Thursday.

Trump has labeled KORUS a "disaster" that increased the US trade deficit with South Korea and took away 200,000 American jobs. In September the administration was close to terminating the deal but stopped short amid opposition from within Congress and renewed tensions over North Korea's sixth nuclear weapons test.

Cutler warned the administration that withdrawing from the pact would damage its prospects for bilateral trade negotiations with other Asian nations. (Yonhap)