The US awards South Korea an indefinite exemption from steel tariffs

28 March, 2018, 01:05 | Author: Roderick Gutierrez
  • Vice Premier Han Zheng touches on the issue of tariffs in a speech

South Korea and the United States earlier this month held a third round of negotiations on revising their trade pact.

South Korea's trade minister Kim Hyun-chong says this removes uncertainties for domestic steelmakers.

The Trump administration instigated talks in July to renegotiate the free-trade treaty, known as KORUS, and the United States last week imposed duties on steel imports from multiple countries including China, raising fears of a trade war. This also does not affect South Korean automakers because they are now exporting no pick-up truck to the United States. Seventy percent is somewhat of a disappointment but it still installs a ceiling and would prevent a huge flood of import volumes. We said we were going to proceed.

Producers in the United States are bound to enjoy market share gains as a result of the quota, KeyBanc Capital Markets analyst Philip Gibbs wrote in a research note.

While South Korea made some concessions to USA demands on the key auto trade issues, the revision of the free trade pact aligns with South Korea's own interests, experts said.

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

All three major United States automakers - General Motors, Chrysler, Ford - each shipped fewer than 10,000 vehicles to South Korea a year ago, Kim said, adding: "This is an important fact".

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. "We can now solidify the already water-tight cooperation between South Korea and the USA".

Seoul has agreed to cut steel exports to the U.S. by 30 percent and accepted extended tariffs on South Korean pick-up trucks to secure a revised trade deal with the USA and escape Washington's steel duties, the government admitted Monday. However, shipments of the metal to the US exempt from the new tariffs will be limited to a quota of about 2.68 million tonnes a year, or 70 percent of the annual average between 2015-2017. The next-largest category was metallic coated sheet and strip, at 229,000 tonnes.

While negotiations were underway, Washington granted a temporary deferment to seven countries, including South Korea, on steel import restrictions.

The deal comes at a time of heightened tension on the Korean Peninsula, with the White House planning to move forward with talks with North Korea's leader, Kim Jong Un, and appears to end a dispute that had strained ties between Washington and a reliable Asian ally.

On cars, which is an area of particular interest for the Trump administration, the USA will maintain tariffs on South Korea's exports of pick-up trucks until 2041, from the previously agreed 2021. It was up from 25,000 vehicles under the current deal. The United States has prioritized reducing its trade deficits with other countries; in 2016, it had a $17 billion deficit with South Korea.


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