S Korea agrees to new trade pact with US
THE US and South Korea have agreed to revise a trade pact sharply criticised by US President Donald Trump, Seoul said yesterday, with US vehicle makers winning improved market access and Korean steel makers hit with quotas, but avoiding hefty tariffs.
The planned changes in the US-Korea Free Trade Agreement were seen as limited, leaving South Korea’s key passenger car exports untouched and helping soothe fears that Trump’s tough approach could start a spiralling global trade war.
In April, Trump said he would either renegotiate or terminate what he called a “horrible” trade deal that has doubled the US goods trade deficit with South Korea since 2012.
Asian shares steadied yesterday, stemming last week’s hefty losses after Trump’s action on steel and aluminium, and his plans to slap tariffs on up to $60 billion (R702bn) in Chinese goods.
The agreement means South Korea will be forced to cut its steel exports to the US by 30 percent of the past three years’ average, in exchange for becoming the first US ally to receive an indefinite exemption on steel tariffs imposed by Trump.
Last week, Trump temporarily excluded six trade partners – Canada, Mexico and the EU – from higher US import duties on steel and aluminium which came into effect on Friday.
South Korea has received a quota of about 2.68 million tons of steel exports, or 70 percent of the annual average Korean steel exports to the US between 20152017, which will be exempt from the new tariffs, the ministry said in a statement.
South Korea was not allowed to export steel products exceeding that quota to the US market, a ministry official said.
Trump was elected in 2016 after promising to punish what he saw as unfair trade practices by other countries, particularly China.