Economy

US, South Korea strike a new trade deal

US, South Korea strike a new trade deal

South Korea escapes America's new 25 percent tariff on imported steel but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the United States from 2015 to 2017.

The U.S. Treasury Department also is negotiating a side agreement with its South Korean counterpart with a goal of monitoring Seoul's intervention in currency markets.

President Donald Trump's top trade adviser Peter Navarro on Wednesday called the original U.S.

South Korea will consider US vehicle emission standards in formulating its emissions standards for 2021-2025.

The United States and South Korea have agreed in principle on revisions to a free trade agreement, said senior White House officials at a press teleconference on Tuesday.

The Asian country is still subject to the 10-percent tariff on its aluminum exports to the United States, said the officials. "So, South Korea will reduce the amount of steel that they send into the United States as part of this".

South Korea previously subjected US cars to addition testing and environmental standards, but now will align those tests with USA standards.

For U.S. automakers, South Korea agreed not to reimposing a tariff on cars that Seoul has previously lifted. A formal agreement on currency would be unprecedented-but it wouldn't have teeth, because it would include no enforcement mechanism. Roughly 80 percent of the trade deficit in goods with South Korea is attributable to autos and auto parts, according to the officials, one of whom identified autos and trucks as a "core driver of the deficit". The Treasury's October report urged Korea to "to enhance the transparency of its exchange rate intervention".

In exchange, South Korea will be exempted from the 25 percent tariff on its steel exports to the United States.

President Donald Trump has his first trade deal. It no longer seems absurd to hope that Trump's actions and bluster about tariffs will actually persuade other countries to open their markets to American goods and services - while doing little or nothing to damage the flow of goods and services across global borders.

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. Provisions in KORUS allow the two countries to rework sections of the trade pact without the congressional oversight and consultations required under Trade Promotion Authority as long as there are no changes to US law. Since 2012, the US trade deficit with South Korea has soared from $16 billion to almost $23 billion a year ago. Administration officials said South Korea would be exempt from the steel tariff, but not the new levy on aluminum.

South Korea also agreed to amend a government health program that pays premium prices to domestic drug companies in order to ensure a level playing field for USA pharmaceuticals producers, the U.S. officials said.

South Korea agreed to reduce its steel exports to the U.S.by roughly 30 percent and double the number of cars each USA auto manufacturer can sell there without meeting South Korean safety and environmental standards, despite American vehicle sales being far below the current limit.

The agreement, essentially a renegotiation of the United States-Korea Free Trade Agreement (KORUS FTA) both countries first signed in 2007, was billed as "historic", by senior administration officials in a call to reporters Tuesday announcing the breakthrough.

During the meeting, Kim committed to denuclearisation in Korea if the United States and the South showed "goodwill", it was reported, with China agreeing to support its neighbor if nuclear tensions could be eased.


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