US Revises Trade Deal with South Korea

The United States has agreed to revise its trade deal with South Korea. The revision ended up with the Asian country being exempted from the steep steel tariffs proposed by US President Donald Trump. The two countries are currently working out ways to resolve disputes prior to the scheduled meeting with North Korean Supreme Leader Kim Jong-un.

South Korea’s trade minister said in a statement that the two countries sealed the deal “in principle” on the bilateral trade agreement called Korus. This was announced after Treasury Secretary Steven Munchin said that Robert Lighthizer, the US Trade Representative, had reached a “very productive understanding.”

To be spared from the US tariff, South Korea would be limiting US shipments of the metal to about 2.7 million tons a year, according to the ministry. It also agreed to double the number of American cars that could be exported without meeting local safety standards. However, US-based manufacturers sell relatively fewer cars in the market.

In a separate statement, White House trade adviser Peter Navarro said that “it looks like we’re going to have a very, very good result” regarding Korus.

The deal would be the US president’s first since coming to power and promising to put “America first.” The Trump administration has since triggered a string of trade disputes among nations, including China and Canada.

In the past, Trump has criticized America’s 6-year-old trade deal with South Korea, tagging it as a “job killer,” while asking South Korean President Moon Jae-in’s help to pressure North Korea against the Kim’s nuclear weapons.

The disagreement almost drove the two countries apart as Moon prepared to meet his North Korean counterpart next month, which is what Trump needs in order to meet with Kim. Moon has urged Trump to show that their “alliance is very solid” resolve their dispute.

“Ahead of the inter-Korean summit in late April and the US-North Korea summit in May, we’re at a moment where close cooperation is more important than at any other time,” said Yoon Young-chan, chief communications official of Moon. “We can now solidify the already water-tight cooperation between South Korea and the US.”

South Korea’s sales to the US account for 11 percent of total overseas shipments of the metal, according to the South Korean ministry, adding that the steel quota would unlikely hurt South exports.

The Asian country’s tariff exemption was granted at the country level. Meanwhile, their officials and the White House are still in talks whether the exemption would be permanent or would expire, according to South Korean Trade Minister Kim Hyun-chong.

Last year, Korea’s trade surplus with the US reached about $18 billion, lower than $23 billion in 2016, according to the Korea International Trade Association.

Tariffs on Korea’s exports of pick-up trucks will still be in effect until 2041. It was previously agreed to last until 2021, according to the ministry’s statement. At present, no automobile company exports these vehicles from South Korea to the US, Kim Hyun-chong said.

Tariffs that have been lifted before will not be reimposed, according to Kim. The country is also planning to ease some of the safety and environmental regulations on imported American cars.

HQBroker is here to give you a daily news roundup about the forex, commodities, technologies, automobiles, and economies. You can open an account now and make yourself updated with essential news in the market.