The U.S. agreed to settle its trade spat with South Korea, revising its trade deal and sparing the latter country from Pres. Donald Trump’s steel tariff before planned meetings with Kim Jong Un take place next month.
The two countries reached an agreement “in principle” on the bilateral free trade agreement known as Korus, South Korea’s trade ministry said in a statement Monday.
The announcement came after Treasury Secretary Steven Mnuchin said on Sunday that U.S. Trade Representative Robert Lighthizer had reached a “very productive understanding.”
Lighthizer’s press office didn’t respond to requests for comment on the agreement. White House trade adviser Peter Navarro said on Monday that “it looks like we’re going to have a very, very good result” on Korus.
The deal would mark Trump’s first since taking over as a president, promising to put “America First” last year and triggering a series of trade disputes with Canada and China.
Trump criticized the U.S.’s 6-year-old trade deal with South Korea as a “job killer”, and opened negotiations, even as he sought President Moon Jae-in’s help to put pressure on North Korea’s nuclear weapon program.
The trade dispute threatened to drive a wedge between the two allies as Moon prepared to meet Kim next month, an encounter that Trump needs to make way for his own proposed summit with the North Korean leader.
Moon insisted Trump to “show the world that our alliance is very solid” and resolve their trade disputes in a phone call earlier this month.
“Ahead of the inter-Korean summit in late April and the U.S.-North Korea summit in May, we’re at a moment where close cooperation is more important than at any other time,” Yoon Young-chan, Moon’s chief communications official said on Monday.
“We can now solidify the already water-tight cooperation between South Korea and the U.S.”
South Korea would restrict U.S. shipments of the metal to about 2.7 million tons a year to avoid the steel tariff, the ministry said. The country also agreed to double to 50,000 the number of U.S. cars that could be imported without meeting local safety standards, although American manufacturers sell far fewer cars on the market.
The steel quota won’t likely hurt South Korea’s exports since sales to the U.S. account for 11 percent of total overseas shipments of the metal, the South Korean ministry said. The quota is set at 70 percent of the average of steel sales to the U.S. during 2015-17.
South Korean Trade Minister Kim Hyun-Chong said the country’s tariff exemption was the first granted by Trump on the country level, and officials were still discussing with the U.S. whether it would be permanent or expire after a time. The Korea Iron & Steel Association welcomed the deal while saying the quota was smaller than the industry wanted.
Korea’s trade surplus with the U.S. was about $18 billion last year, down from $23 billion in 2016, according to the Korea International Trade Association. Cars accounted for more than 70 percent of the value of the surplus.
The U.S. will keep tariffs on Korea’s exports of pick-up trucks until 2041, from the previously agreed 2021, according to the ministry’s statement. Currently, no car company exports these vehicles from South Korea to the U.S., which factored into the talks, Kim said.
BWorldFinance is your primary source of news in the financial market, technology, and more. Visit bworldfinance.com now and get the latest happenings in the market. Register an account now and begin your investing journey!