nsucurrent.com April 24, 2018

Trump Trade War - South Korea and U.S. reach deal on quota

28 March 2018, 01:07 | Colleen Roy

Trump Says Trade Deal With South Korea 'Close to Being Finished'

S. Korea Gets Temporary Exemption from Trump's Steel Tariffs

A girl holds a banner during a rally demanding peace on the Korean Peninsula near United States embassy in Seoul, South Korea on Saturday.

The US and South Korea reached an agreement on revising their six-year-old bilateral trade deal and the US said it wouldn't impose President Donald Trump's tariffs on steel imports from its ally in Asia. "But we are not afraid, we will stand up to the bullies".

In return for the exemption, Seoul accepted the USA call to set an import ceiling on South Korean steel products at 2.68 million tons per year, or 70 percent of South Korea's average steel exports to the United States for three years through 2017. This is because no US automaker is now selling more than 50,000 cars a year in South Korea although the number of American vehicles made in the USA, complying with US vehicle safety standards and allowed to be exported to South Korea without safety inspection in South Korea has been doubled to 50,000 a year.

South Korean officials told Reuters that while the deal agreed was the best they could hope for, further pressure on trade was likely under Trump's presidency. According to the Korea Automobile Importers & Distributors Association, a total of 20,019 American vehicles were sold in the South Korean market in 2017 to account for 8.6% of the total imported auto sales in it during the same period.

The announcement comes amid Seoul and Washington are focusing on their summits with North Korean leader Kim Jong Un in the late April and May, respectively. Moon urged Trump "to show the world that our alliance is very solid" and resolve their trade disputes in a phone call earlier this month.

South Korea's steel association said in a statement it was a "relief" that South Korea has been excluded from USA steel tariffs, but it was regrettable it was unable to secure higher quotas for steel exports. The quota is set at 70 per cent of the average steel sales to the USA during 2015-2017. The Korea Iron & Steel Association welcomed the deal while saying the quota was smaller than the industry wanted. If President Trump becomes a two-term president... We said we were going to proceed.

Korea's trade surplus with the United States was about $18 billion past year, down from $23 billion in 2016, according to the Korea International Trade Association.

While U.S. carmakers will be able to ship 50,000 cars to South Korea annually, 25,000 more than before, without being subject to domestic safety regulations no American auto brand sold more than 10,000 vehicles in South Korea a year ago.

Under the pact, Seoul will further open its auto market to United States manufacturers, while accepting a 20-year extension until 2041 to a 25 percent USA tariff on Korean pick-up trucks.

"I don't see a high chance of vehicle makers expanding United States imports", he said.

South Korea has negotiated an exemption from the United States' Section 232 steel tariff and instead will be subject to a quota.

South Korea also will ease emission standards for American cars shipped from 2021-2025, when the Asian country is due to set new import regulations.

Kim said no automakers previously exceeded the 25,000-vehicle threshold a year.

Korea didn't agree to any additional opening of the agriculture market and also maintained its stance in other sensitive areas, the statement said.

The import quota is equivalent to 74 percent of last year's South Korean steel exports to the United States.

"We expect to sign that agreement soon", Mnuchin said on Fox News Sunday, calling the agreement an "absolute win-win".

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