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U.S., S. Korea reach agreement on revising trade deal

Posted March. 27, 2018 08:09,   

Updated March. 27, 2018 08:09

한국어

South Korea has reached an agreement on revising its trade deal with the United States and secured an exemption from Trump’s heavy tariff on steel imports, almost finalizing their contentious negotiations. According to the announcement made on Sunday by South Korea’s Trade Minister Kim Hyun-chong, the country was able to safeguard its agricultural market and avoid a 25 percent steel tariff, but the quota on steel exports has been set at 70 percent of the average. To a certain extent, it has suffered a loss, but avoided the worst case on the whole. Although some technical issues need to be iron out at the working level, Seoul and Washington will soon sign the agreement as both sides are saying the results were satisfactory.

Regarding the automobile sector, Seoul has agreed to ease its non-tariff barriers on imported U.S. cars and allow Washington to maintain tariffs on its exports of pick-up trucks for another 20 years. The auto industry insiders say there will be little immediate impact on South Korea’s domestic market since U.S. automakers such as Ford and GM are not as competitive as Korean, German and Japanese automakers. Nor the Korean shipments of pick-up trucks to the United States is large enough to pose a serious risk to the country’s industry. Let alone what’s been agreed, it is a big relief that the government has cleared economic uncertainties out in three months after the talks started.

U.S. Treasury Secretary Steve Mnuchin expressed its satisfaction on the agreement, calling the agreement “an absolute win-win,” on Fox News Sunday. Trump also achieved his goal to please his strong voters in the Rust Belt, once industrial manufacturing city in decline, and for the auto and steel industry there, by making South Korea concede in the auto sector.

As evidenced by the multiple back-to-back negotiations, the Trump administration’s trade policy only pursues its national interest. Its economic interest prevailed over security alliance. On the contrary, the Abe administration, which praised the U.S.-Japan relationship as the closest alliance unprecedented in history, got no exemption on the tariffs. Who knows Trump will bring up another trade issue later? It may be too old fashioned to believe that the United States is our ally for security while China is our partner for economy. Nevertheless, the fact is China is our largest export market.

The success of the negotiations was in large credited to South Korea's top trade negotiator Kim. All-out efforts were made, till the last minute, by many top officials including the national security advisor and the finance minister along with President Moon, but hardly by the Foreign Ministry, which has promoted economic diplomacy. South Korea is an economy heavily depending on its exports, and global trade protectionism is and will be intensifying. Taking this opportunity, the government needs to strengthen the trade department led by the minister for trade, currently at the vice-ministerial level, while nurturing trade professionals who are better at dealing with protectionist measures.