South Korea makes concessions to preserve U.S. trade deal
- Author: Megan Austin Mar 28, 2018,
Mar 28, 2018, 1:07
Washington will impose a quota on steel imports instead, while South Korea in return will improve access for USA automakers under the bilateral free trade deal known as KORUS.
US President Donald Trump imposed tariffs on some metal imports into the country in a bid to force the US' trading partners to renegotiate trade deals in exchange for exemptions from the trade protectionist measures.
South Korea is the third-largest steel exporter to the United States and the world's top importer of Chinese steel, leading to concerns it was a conduit for China's excess capacity.
South Korea will be assigned an annual United States steel import quota of 2.68 million tons, Trade Minister Kim Hyun-chong said in a statement on the Ministry of Trade, Industry and Energy's website on Monday March 26.
The meeting in April would be the first inter-Korean summit in 11 years while the one in May would be the first-ever between the leaders of North Korea and the U.S. after seven decades of conflict and 25 years of failed negotiations and tensions over Pyongyang's nuclear programme.
Trump's hardcore support may be disappointed that he has already begun granting exemptions to his protectionist policies, but close ties between the US and South Korea are of particular importance at this moment in time.
In exchange, the country will cap its exports of the metal at 2.68 million tons a year, which equals 70 percent of South Korea's annual average shipments to the U.S. between 2015 and 2017.
Will tariffs against Chinese goods spark trade war?
But in a surprise move, Mr Trump said he was only willing to give the bloc a temporary reprieve, until May 1. China quickly responded with tariffs of its own that will hit U.S. imports worth $ 3 billion .
"We are going to proceed with our tariffs".
South Korean automakers should make investments and hire new workers in the United States to build pick-up trucks to avoid the 25 per cent tariff, he added.
Photo Kim Hyun-chong, the South Korean trade minister, in Seoul on Monday.
Kim said no automakers previously exceeded the 25,000-vehicle threshold a year.
The revised agreement appears like significant concessions by South Korea but is expected to have little impact on its exports to the United States or its domestic auto market.
All three major U.S. automakers - General Motors, Chrysler, Ford - each shipped fewer than 10,000 vehicles to South Korea past year, Kim said, adding: "This is an important fact". Currently, no auto company exports these vehicles from South Korea to the U.S., which factored into the talks, Kim said.
The two allies started discussing how to amend the free trade pact in August after Trump blamed it for causing the US trade deficit with South Korea.