KORUS FTA negotiations have a rocky road ahead

The United States is explicitly revealing its intention to draw the most advantageous result in the KORUS FTA with steel tariff on its back. It also hinted to finish the KORUS FTA amendment negotiation without delay by making sure the deadline for negotiation on whether to exempt steel tariff is the end of April.

South Korea is now under a more unfavorable situation in the FTA amendment negotiations than before, given that it will have to make concessions in relation to sectors the United States is interested in such as vehicles to get an exemption. Some concern that South Korea may face more losses in the automobile industry than expected initially.

“The U.S. Trade Representative designated South Korea as a ‘temporary exemption’ country by applying Article 232 of the Trade Expansion Act. We need to engage in ‘conditional negotiation’ with the United States until the end of April,” explained the South Korean Ministry of Trade, Industry and Energy on Friday. “There is high possibility that the United States may impose steel tariff if it fails to get a result they want in the fourth KORUS FTA amendment negotiation that is scheduled in April.” 　

The South Korean government sees that the substantial condition for tariff exemption on steel is an amendment of the FTA that the United States can satisfy with. This is backed by U.S. Trade Representative Robert Lighthizer’s comment that South Korea is “in a similar circumstance with the two countries that are renegotiating the North American Free Trade Agreement (NAFTA).” The United States is pulling up its negotiation power to its maximum with the NAFTA renegotiation ahead of them on April 8.

The South Korean negotiation team including Trade Minister Kim Hyun-chong, who is currently staying in the United States, is discussing with the USTR to get tariff exemption for steel and amend the KORUS FTA simultaneously.

Also, the possibility of the United States oppressing South Korea to join its holding China in check cannot be ruled out. The United States has requested the European Union to participate in containing China to get a tariff exemption in steel. There have not been any signs that South Korea has received such request. If South Korea indeed faces such request, it will inevitably get involved in the trade war between the United States and China, which will make South Korea’s trade environment unstable as a whole.


Gun-Huk Lee gun@donga.com