S.Korea earns exemption from United States heavy tariffs on steel imports

Kim Hyun-chong

S.Korea earns exemption from United States heavy tariffs on steel imports

Steel products are pictured stacked at a steelworks in Seoul July 23, 2014.

South Korea has agreed to further open its auto market to the United States as the two countries prepare to amend their six-year-old free trade agreement, its top trade negotiator said Monday.

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.

Previously lifted tariffs on South Korean vehicle exports won't be reimposed, Kim said, and the nation planned to ease some of the safety and environmental regulations on imported United States cars.

Trump's action on steel and aluminium, along with plans to slap tariffs on up to US$60 billion (RM234.8 billion) in Chinese goods had fuelled concerns of a damaging global trade war.

Kim said on Monday that amendments were agreed to, although he did not elaborate except to state that South Korea made no concessions on its agriculture markets and there were no changes to existing tariffs. The latest agreement removed two uncertainties. Canada, Mexico, the EU, Brazil, Argentina and Australia also received temporary exemptions from the tariffs that will last until May 1, unless a long-term agreement is reached.

On steel, South Korea accepted an annual export quota of 2.68 million tonnes to the USA, 70 percent of its average shipments in the last three years.

Korea's trade surplus with the US was about $18 billion past year, down from $23 billion in 2016, according to the Korea International Trade Association.

Trump was elected in 2016 after promising to punish what he saw as unfair trade practices by other countries, particularly China.

South Korea's Trade Minister Kim Hyun-chong answers a reporter's question during a briefing at Foreign Ministry in Seoul, South Korea, Monday, March 26, 2018.

South Korea is America's sixth-largest trading partner and is among the largest exporters of steel to the USA, yet concerns about a the growing trade deficit with South Korea has led the Trump administration to consider pulling out of KORUS, as well as threaten an ally with tough tariffs.

"We are going to proceed with our tariffs". This also does not affect South Korean automakers because they are now exporting no pick-up truck to the United States.

Under Korus revisions, United States automakers will be able to bring into South Korea 50,000 vehicles per automaker per year that meet USA safety standards, not necessarily Korean standards, up from 25,000 vehicles previously. The current ceiling is 25,000 cars, but there's no U.S. company that sells more than 10,000 cars a year, Kim said.

"South Korea will reduce the amount of steel that they send into the United States as a part of this".

"I don't see a high chance of automakers expanding U.S. imports", he said.

The loosened safety inspection regulations are likely to result in an increase in German and Japanese vehicle exports from the U.S.to South Korea. In return, the ministry said, it would be exempt from the tariffs.

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.

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