S Korea makes concessions to preserve US trade deal
Seoul has agreed to cut steel exports to the U.S. by 30 percent and accepted extended tariffs on South Korean pick-up trucks to secure a revised trade deal with the U.S. and escape Washington’s steel duties, the government admitted on March 26.
South Korea and the United States are security allies both threatened by the nuclear-armed North but since taking office U.S. 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 U.S. 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 on March 26.
The South’s economy is heavily dependent on trade, with the U.S. as its second-biggest partner and Seoul’s trade minister said on March 26 they had reached agreement on revising the KORUS deal after weeks of negotiations.Under the pact,
Seoul will further open its auto market to U.S. manufacturers, while accepting a 20-year extension until 2041 to a 25 percent U.S. tariff on Korean pick-up trucks.On steel, South Korea accepted an annual export quota of 2.68 million tons to the U.S., 70 percent of its average shipments in the last three years.
In exchange it will be exempted from the U.S. 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 U.S.’ trade deficit had ballooned since it was signed.The number of auto imports to South Korea from the U.S. that will not have to meet Seoul’s safety regulations was doubled to 50,000 vehicles, Kim said.
‘Continuance of risks’
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 U.S. auto parts and avoid any backtracking on already exempted tariffs.
But he expected more turbulence in the relationship under the current U.S. 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.”
The two sides will meet in the coming days to finalize the updated pact, Kim said.
All three major U.S. automakers -- General Motors, Chrysler, Ford -- each shipped fewer than 10,000 vehicles to South Korea last year, Kim said, adding: “This is an important fact.”
Trump said on March 23 the two sides were “very close” to a final agreement, adding: “We’re going to have a wonderful deal with a wonderful ally.”
Despite fears of a tit-for-tat trade war with China that have sent global markets tumbling,
Trump said many countries are now coming to the table to negotiate “fair” trade deals with the United States.South Korea was one of seven economies temporarily exempted from the steel duties that went into effect on March 23 and were mainly aimed at targeting Chinese production.
According to figures from the U.S. Commerce department, the country’s total trade deficit with South Korea jumped from $7.7 billion in 2012 to $18.6 billion in 2015, before declining to $10.3 billion last year.