S Korea, US reach agreement in principle on trade: Minister

28 March, 2018, 01:50 | Author: Clarence Schmidt
  • S. Korea, US reach deal 'in principle' on FTA, steel tariffs

The U.S. and South Korea reached an agreement on revising the allies's 6-year-old bilateral trade deal and President Donald Trump's plan to impose tariffs on imported steel, Treasury Secretary Steven Mnuchin said.

According to Reuters, the planned changes in the US-Korea Free Trade Agreement (KORUS) were seen as limited, leaving South Korea's key passenger vehicle exports untouched and helping allay fears that Trump's tough approach could start a spiralling global trade war.

The US trade deficit with South Korea has declined since 2014, to United States dollars 10.3 billion a year ago. "The latest agreement removed two uncertainties", he explained, referring to the steel tariffs and the revised KORUS deal.

The announcement was made by Kim Hyun-chong, Seoul's Trade minister, on his arrival at the Incheon International Airport after talks in Washington.

"We expect to sign that agreement soon", Mnuchin said on the "Fox News Sunday" program.

Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports earlier this month, but carved out a temporary exemption for a slew of major USA allies, including South Korea.

The import duties, of 25 per cent on steel and 10 per cent on aluminium, were mainly aimed at curbing imports from China. In return, South Korea received an exemption from a 25 percent steel tariff with a quota of about 2.68 million tons, or 70 percent of the average exports to the USA over the previous three years.

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

Alarm over a possible trade war between the world's two largest economies has chilled financial markets as investors foresee dire consequences should trade barriers go up.

Dongbu Steel shares surged as much as 21.8 percent and Husteel shares jumped 7.3 percent, before giving up much of their gains, while Seah Steel rose 5.5 percent.

South Korea was considered to be in a hard situation at the beginning as it was the third largest steel exporter to the U.S.as of 2017 and held the biggest volume of steel imports from China, which was sharply criticized by the US for steel supply glut.

The US secured a 20-year delay in eliminating tariffs on South Korean pickup trucks.

It also agreed to double to 50,000 the number of U.S. cars that could be imported without meeting local safety standards.

Kim said no auto makers previously exceeded the 25,000-vehicle threshold a year. Seoul had negotiated with the US side on the new tariffs and the bilateral free trade pact that took effect in 2012. USA officials were most interested in the vehicle trade, he said.

The resolution of these trade disputes, which have created tension in an important bilateral relationship at a crucial time in dealings with North Korea, allow the US and South Korea to face North Korea from a more stable, unified position.

"The Trump administration needed to harvest an outcome from the negotiation to show its supporters", he added, warning that Washington could in future "slap tariffs on semiconductors" - a crucial South Korean export.



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