U.S. President Donald Trump, who campaigned against economic agreements he considered unfair to America has his first trade deal.
The United States and South Korea have agreed to revise their sweeping six-year-old trade pact which was completed during the administration of Trump’s predecessor, Barack Obama.
The agreement “will significantly strengthen the economic and national security relationships between the United States and South Korea,” according to a senior administration official in Washington.
Trump had threatened to scrap the Korea-US Free Trade Agreement (KORUS FTA), calling it “horrible.” But officials of his administration on Tuesday confirmed key aspects of the agreement which officials in Seoul had announced the previous day.
“When this is finalized it will be the first successful renegotiation of a trade agreement in U.S. history,” according to a senior U.S. official.
The tentative agreement between the United States and its sixth largest trading partner and a critical security ally in Asia comes at a time of fast-moving developments on the Korean peninsula.
In exchange for terms more favorable to American automakers, South Korea — the third largest steel exporter to the United States — is being exempted for recently announced heavy tariffs on steel rolled out by Trump. South Korea will also limit to about 2.7 million tons per year shipments of steel to the United States.
“This is a huge win,” a senior U.S. official, speaking on condition of anonymity, told reporters on a conference call Tuesday evening.
Trump last week also temporarily excluded other trade partners, including Canada, the European Union and Mexico from the announced import duties of 25 percent on steel and 10 percent on aluminum, which came into effect on Friday.
Under the revisions to be made the KORUS FTA, South Korea is to allow American carmakers to double to 50,000 the number of vehicles that meet U.S. safety standards to Korea annually even though they do not comply with various local standards.
“The revisions to the KORUS FTA benefit both countries as they addressed the United States’ primary concern in autos trade, opening the South Korean market to additional exports of U.S. autos,” Troy Stangarone, the senior director of congressional affairs and trade at the Korea Economic Institute in Washington, tells VOA. “For South Korea, they addresses concerns in the dispute settlement process, while the overall revisions remained relatively narrow in scope. The agreement also takes a potentially contentious issue off of the table as the United States and South Korea prepare for critical talks with North Korea.”
Vehicle emissions standards will also be eased for U.S. vehicles imported from 2021 to 2025.
The Korea Automobile Manufacturers Association immediately called on Seoul to also ease environmental and safety standards for domestic vehicle manufacturers “to offer a level playing field.”
The balance is heavily in favor of South Korea. According to U.S. government statistics, Americans bought $16 billion worth of passenger cars while such purchases made by South Koreans totaled just $1.5 billion.
The United States, under the revised deal, will also maintain tariffs on exports of South Korean pick-up trucks until 2041, an extension from the previously agreed 2021. However, no South Korean manufacturer is currently exporting such vehicles to the U.S. market.
U.S. officials also say that South Korea has agreed to recognize U.S. standards for auto parts.
“They will reduce some of the burdensome labeling requirements when it comes to auto parts,” a senior U.S. official told reporters.
The apparent settlement of the trade dispute comes before a planned meeting between the leaders of rival South and North Korea. Trump has also accepted an invitation relayed by the South from the North’s leader, Kim Jong Un, to meet with the U.S. president. The White House on Tuesday said planning for such a summit is still proceeding but no location or date has been decided. State Department official say they are unsure it will happen by May as previously announced.
The rival Koreas have no diplomatic relations and technically remain at war since a 1953 armistice signed by armies of China and North Korea with the United Nations Command, led by the United States.