South Korea makes concessions to preserve US trade deal
SEOUL: Seoul has agreed to cut steel exports to the US by 30 per cent and accepted extended tariffs on South Korean pick-up trucks to secure a revised trade deal with the US and escape Washington’s steel duties, the government admitted yesterday.
South Korea and the United States are security allies both threatened by the nuclear-armed North but since taking office US President Donald Trump repeatedly threatened to tear up their free trade agreement, raising concerns about undermining the economic leg of their alliance.
The Trump administration instigated talks in July to renegotiate the free trade treaty, known as KORUS, and the US last week imposed duties on steel imports from multiple countries including China, raising fears of a trade war.
South Korea and the United States have agreed “in principle” on the revisions of their free trade agreement (FTA) and steel tariffs, Seoul’s trade minister said Monday.
The South’s economy is heavily dependent on trade, with the US as its second-biggest partner and Seoul’s trade minister said Monday they had reached agreement on revising the KORUS deal after weeks of negotiations.
Under the pact, Seoul will further open its auto market to US manufacturers, while accepting a 20-year extension until 2041 to a 25 per cent US tariff on Korean pick-up trucks.
On steel, South Korea accepted an annual export quota of 2.68 million tonnes to the US, 70 per cent of its average shipments in the last three years.
In exchange it will be exempted from the US steel tariffs, trade minister Kim Hyon-chong told reporters.
He described the negotiations as ‘fierce’ but insisted: “As a negotiator, I can say it was a negotiating table where I had nothing to feel inferior about.”
Trump has long called the 2012 KORUS agreement a “horrible” deal and a job killer, arguing it was lopsided on the grounds that the US’ trade deficit had ballooned since it was signed.
The number of auto imports to South Korea from the US that will not have to meet Seoul’s safety regulations was doubled to 50,000 vehicles, Kim said.
Apart from the steel tariffs exemption, he did not identify any other concessions on Washington’s part.
He insisted that Seoul had been able to defend its ‘red line’ on farm goods, obligatory use of US auto parts and avoid any backtracking on already exempted tariffs.
But he expected more turbulence in the relationship under the current US president.
“There are always risks in trade,” Kim said.
“I think President Trump will be a two-term president and be at the White House for eight years and in my opinion, I think there will continue to be risks during this time.”