South Korea to scrutinise US-Japan trade deal as officials fly to Washington
Sign up now: Get ST's newsletters delivered to your inbox
As Japan competes with South Korea in areas such as cars and steel, Tokyo’s trade deal will pile pressure on Seoul to reach a similar level of 15 per cent.
PHOTO: REUTERS
Follow topic:
SEOUL - South Korea will take a close look at the terms of a US-Japan trade deal, its industry minister said on July 23, holding out the prospect of greater cooperation in the energy and industrial sectors ahead of key trade talks in Washington.
Japan competes with South Korea in areas such as cars and steel, so Tokyo’s trade deal
The new finance ministry and the top trade envoy of Asia’s fourth-biggest economy are set for high-level trade talks with US counterparts in Washington on July 25.
“Investors see the Japan-US deal as a benchmark for the Korean deal,” said Mr Kim Sung-rae, an analyst at Hanwha Investment and Securities.
“The deal would put pressure on Korean negotiators to come up with a similar or better deal,” he added.
South Korea’s benchmark Kospi index edged down 0.3 per cent on July 23, but shares in carmakers and suppliers rallied after the Japan-US deal. Hyundai Motor rose 6.8 per cent and Kia jumped 6.4 per cent.
New President Lee Jae-myung has said Seoul wanted to avoid a comparative disadvantage with other countries in trade deals.
“It will be difficult for South Korea to have US tariff rates lower than 15 per cent on Japan and 10 per cent on Britain,” said Dr Kim Yong-jin, a management professor at Sogang University.
Seoul needed to import more farm goods and energy, as well as boost investments, as Japan had done to reach a similar outcome, he added.
South Korea will exclude the opening up of its rice and beef markets as a bargaining chip in the Washington talks, instead considering more US imports of crops for fuel, such as corn for bioethanol, the Yonhap News Agency said.
“We will make an all-out effort to produce a positive sum result that will allow Korea-US industrial and energy cooperation to be upgraded to the next level,” South Korea’s Industry Minister Kim Jung-kwan said in a statement.
Since the result could have a significant economic impact, South Korea would respond thoroughly while closely considering the sensitivity of its industry, he added.
Mr Kim will meet US Commerce Secretary Howard Lutnick and Energy Secretary Chris Wright, among others, he told reporters before boarding a plane to Washington for the talks.
In a post on Truth Social, US President Donald Trump said Japan would boost market access for American producers of cars, trucks, rice and certain agricultural products, among others.
The deal’s tariff of 15 per cent on all Japanese imports is down from a proposed 25 per cent, with Mr Trump adding that it would include US$550 billion (S$703 billion) of Japanese investments in the United States.
Last week, South Korea’s Chosun Ilbo newspaper said the United States in July had asked Seoul in talks to set up a large-scale investment fund to support the reconstruction of its manufacturing industry, without identifying a clear source. REUTERS
