South Korea will further open up its auto market to American companies in exchange for an exemption from U.S. tariffs on steel, Seoul’s trade minister said Monday.
Minister Kim Hyun-chong told reporters in Seoul, after his weeks-long trip to Washington, that the two governments have reached an agreement on amending their bilateral free trade agreement (FTA).
For months, Seoul and Washington have been at odds over revising the pact, which U.S. President Donald Trump had called a “horrible deal” and a “job-killer,” that increased America’s trade deficit.
During trade talks, South Korea agreed to further lower barriers for U.S. carmakers in the local auto market — which Washington has been pushing for throughout the three rounds of renegotiation talks.
Seoul will apply eased vehicle emission standards for American cars shipped to the country from 2021 to 2025, as well as double the number of U.S. cars that don’t have to comply with domestic regulations from the current 25,000 to 50,000.
The two sides also agreed to extend the 25 percent tariff on imports of Korean pickup trucks by 20 years until 2041, Chosun Ilbo reported.
Exports of American cars to South Korea soared 380 percent from 2011, before the trade pact was enforced, to $1.68 billion in 2015.
Meanwhile, Washington agreed to exclude South Korea from the 25 percent tariff it will levy on foreign steel.
However, an annual quota will be set on South Korean steel products — some 286 million tons, or 70 percent of the country’s steel exports shipped to the United States between 2015 and 2017.
Kim says around three percent of the country’s steel exports will be affected, Yonhap reported.
Other revisions include minor changes to the investor-state dispute settlement clause, which Seoul has claimed could be abused by multinational companies to sue the local government for alleged discriminatory practices.
The trade ministry says officials are currently working on the final draft of the deal before the two governments sign and ratify the document.