US, South Korea overhaul trade pact

US, South Korea overhaul trade pact

US, South Korea overhaul trade pact

It's unclear when the final agreement could be reached.

The revision calls for further opening South Korea's auto market to the US, among other things, and comes with an agreement to exempt South Korea from new USA tariffs on steel imports.

The auto sector is among the most contentious issues in South Korea's trade dealings with the U.S. The Korean Automobile Manufacturers Association praised the government's efforts to protect South Korean automakers and avoid major changes on sensitive issues such as adjusting tariffs.

Asked whether the forex agreement would ensure that South Korea is not declared a manipulator in the U.S. Treasury's next currency report due on April 15, the officials declined to comment, saying such assessments would be made in accordance with Treasury's normal procedures. A conventional pact on currency would be unequalled.

It chose to exempt South Korea from steel import restrictions, opting instead to lower the import quota to 70% of the annual average amount exported to the US during the period 2015-2017. Exports that fall within the quota will be exempt from the 25 percent tariff.

The Asian country is still subject to the 10-percent tariff on its aluminum exports to the United States, said the officials. Korean aluminum producers would still be subject to Trump's 10 percent tariff on aluminum.

One official declared that "the President was correct to undertake this renegotiation".

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The United States is likely to pursue similar quota agreements with the other countries including Canada and Mexico, which are now in talks to renew the North American Free Trade Agreement.

The agreements in principle were announced Monday just hours after Trump said Friday that the United States was on the verge of revising its trade agreement with South Korea, which took effect in 2012. "I believe this will help Korean firms to trade stably with the USA, without concern".

Extension of the phase-out period for United States pickup truck tariffs to 2041 would ensure that U.S. pickup truck production would not migrate to South Korea as some production moved to Mexico after the North American Free Trade Agreement eliminated the tariff, the officials said. Over the past five to six years of the KORUS agreement, US exports of automobiles to South Korea, those built to USA safety standards, were capped at 25,000 per manufacturer, per year. The program has been limited to Korean companies.

Numerous fixes are aimed at gaining access for US automakers, which accounts for a huge share of America's $33 billion annual trade deficit with South Korea. It will be concluded between the finance authorities of the two countries.

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.

Rep. Terri A. Sewell, D-Ala., told Lighthizer she and other members of Congress anxious that changes to KORUS could have financial repercussions in their districts. "It is a humiliating deal that accepts Trump's strategy to preemptively block South Korean pickup trucks", Hyundai Motor Company's labour union said in a statement. The U.S. will likely try to include such currency deals in its future negotiations with Japan and other trading partners.

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