The United States and South Korea agreed to revise a trade pact sharply criticised by US President Donald Trump, Seoul said, with US carmakers winning improved market access and Korean steelmakers hit with quotas, but avoiding hefty tariffs.
The South's economy is heavily dependent on trade, with the United States as its second-biggest partner and Seoul's trade minister said yesterday they had reached agreement on revising the KORUS deal after weeks of negotiations.
Asian shares steadied yesterday, stemming last week's hefty losses after Mr Trump's action on steel and aluminium, and his plans to impose tariffs on up to US$60 billion (S$78.7 billion) in Chinese goods.
South Korea was the third-largest source steel imports in the U.S. in 2017, with the country exporting a total of 3.39 million tonnes to the United States past year.
Trade Minister Kim Hyun-chong told a press briefing that the USA side agreed to exempt South Korea from imposing new tariffs on steel imports, saying it removed uncertainty of local steelmakers about exports to the United States. The country also agreed to double to 50,000 the number of USA cars that could be imported without meeting local safety standards, although American manufacturers sell far fewer cars in the market.
USA domestic energy-tubular mills were hoping for a quota of 50% on imports from South Korea, a domestic mill source said.
Trump has sought greater U.S. access to South Korea's domestic automotive market.
Seoul has agreed to double the import quota on American-made cars, as well as reduce the total amount of steel it exports to the US annually by adhering to a quota of 2.68 million tons of steel (roughly 70 percent of its average for the past three years).
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.
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.
Meanwhile, the US will extend a tariff on pickup trucks, which was set to expire in 2021, for an additional two decades.
South Korea also said it would "take into account United States standards and global trends" when Seoul decided its fuel economy and emissions rules from 2021 to 2015. We said we were going to proceed. The current ceiling is 25,000 cars, but there's no United States company that sells more than 10,000 cars a year, Kim said.
"I don't see a high chance of auto makers expanding USA imports", he said.
"South Korea gave concessions in autos in return for steel tariff exemptions", he told Reuters. "That is free and fair trade".