New US deal with South Korea: What you need to know

30 March, 2018, 01:02 | Author: Clarence Schmidt
  • The new deal doubles- to 50,000- the cars each US automaker can export annually to South Korea

United States President Donald Trump secured his first revamp of a USA trade deal this week, after reaching an agreement with South Korea that would allow U.S. carmakers greater access to that country's markets, senior administration officials said on Tuesday night. "South Korea is a template for negotiating other existing free trade agreements with NAFTA and Europe", Rasmus told hosts John Kiriakou and Walter Smolarek.

The US will also extend a 25 per cent tariff on pick-up truck imports until 2041.

The deal also calls for South Korea to eliminate a number of environmental and "country-of-origin" labeling regulations on USA imports that have made it hard for American-made auto parts to be sold.

The U.S. Treasury Department is also in talks on a deal to prevent Seoul from deliberately pushing its currency lower to give South Korean exporters a competitive advantage.

"Clearly, the president was correct to undertake this renegotiation", a senior administration official said Tuesday on condition of anonymity.

South Korea will still be subject to the 10% tariff on aluminum that was imposed on most nations. "There's going to be a certain amount of tension between the two, but I think it's very possible that we could end up over many years and over a series of difficulties working our way to a good place".

While the country won a steel tariff exemption, it is still subject to a quota of about 2.7 million tons of steel products a year, about 74 per cent of its exports in 2017.

As part of a strategy to increase and reduce the trade deficit, the administration also is considering placing higher tariffs on a number of other products, including machinery and aerospace components from China.

Korean officials admitted Monday that they had made concessions to preserve the deal and avoid the 25% steel tariff Trump announced this month against friends and foes alike, raising the specter of a global trade war.

The White House confirmed that as part of the deal South Korea will double its annual quota for imported cars that meet American environmental and safety standards, but not necessarily Korean standards, from 25,000 per manufacturer to 50,000.

"It's also about the US penetrating South Korea's automobile markets".

The United States and South Korea have agreed in principle on revisions to a free trade agreement, said senior White House officials at a press teleconference on Tuesday.

During the meeting, Kim committed to denuclearisation in Korea if the United States and the South showed "goodwill", it was reported, with China agreeing to support its neighbor if nuclear tensions could be eased.

For U.S. automakers, South Korea agreed not to reimposing a tariff on cars that Seoul has previously lifted.

Numerous fixes are aimed at gaining access for USA automakers, which accounts for a huge share of America's $33 billion annual trade deficit with South Korea.

In addition to the agreement on autos, the South Korean trade ministry announced Monday that it would accept a new quota on steel shipped to the US that equaled about 70 percent of its annual average over the last three years.

However, many trade analysts, including Rasmus, are skeptical that the changes to KORUS will impact the U.S. trade deficit or increase USA vehicle sales. "He's hopeful they can get a fair [NAFTA] deal", he said.

"I have absolutely no indication that the United States is walking away from the WTO", Mr Azevedo said. Including it in the text of the deal would have required a lengthy legislative approval process, a path that administration officials indicated they did not want to go down.



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