SEOUL (BLOOMBERG) - The US and South Korea have reached an agreement on revising their six-year-old bilateral trade deal and the US said it wouldn’t impose President Donald Trump’s tariffs on steel imports from its ally in Asia.
The two countries reached agreement “in principle” on the trade deal known as Korus, South Korea’s Trade Ministry said in a statement on Monday (March 26).
While Korea avoids the steel tariff, shipments of the metal to the US will be limited to a quota of about 2.7 million tonnes a year, according to the statement.
Trade Minister Kim Hyun Chong will brief the media on the outcome of the trade negotiation from 11.30am in Seoul.
The announcement came after Treasury Secretary Steven Mnuchin said US Trade Representative Robert Lighthizer reached “a very productive understanding”.
“We expect to sign that agreement soon,” Mr Mnuchin said on the Fox News Sunday programme. “South Korea will reduce the amount of steel that they send into the United States as a part of this.”
Mr Mnuchin called the agreement “an absolute win-win”.
The quota is unlikely to hurt South Korea’s steel exports as sales to the US account for 11 per cent of total steel shipments overseas, the South Korean ministry said. The quota is set at 70 per cent of the average steel sales to the US during 2015-2017.
Friction over Korus came about when Mr Trump started to blame the US’ large trade deficit with South Korea on the agreement.
The issue has been seen as a potential wedge between the allies as both their leaders plan for expected meetings with North Korean leader Kim Jong Un.
Seoul Korea’s trade surplus with the US was about US$18 billion (S$23.62 billion) last year, down from US$23 billion in 2016, according to the Korea International Trade Association. Cars accounted for more than 70 per cent of the value of the surplus.
On cars, which is an area of particular interest for the Trump administration, the US will maintain tariffs on Korea’s exports of pick-up trucks until 2041, from the previously agreed 2021. Korea will ease some of its safety and environmental regulations on imported US cars, the statement shows.
Korea didn’t agree to any additional opening of the agriculture market and also maintained its stance in other sensitive areas, the statement said.
The two countries were able to reach the agreement by narrowing the range of discussions and will seek to settle the details soon, the ministry said.