US President Donald Trump’s administration said it has widened US access to South Korea’s car market while providing US manufacturers protection from South Korean imports.
The US and South Korea have agreed to overhaul the six-year-old US-Korea Free Trade Agreement, senior US administration officials said on Tuesday, confirming an announcement earlier in Seoul.
Trump had called the original South Korea pact a job killer.
The new deal doubles — to 50,000 — the cars each US automaker can export annually to South Korea, reduces bureaucratic barriers to US products and extends a 25 percent US tariff on South Korean pickup trucks by 20 years, through 2041.
South Korea escapes the US’ new 25 percent tariff on imported steel, but must accept quotas on steel exports equal to 70 percent of its average annual shipments to the US from 2015 to last year.
The Asian country was the third-largest steel exporter to the US last year, after Canada and Brazil.
The officials spoke to reporters on condition of anonymity to discuss the policy ahead of an official announcement.
The US this month began imposing the steel tariffs, saying imports jeopardized US national security.
However, it has been suspending the duties on allies like the EU, Canada and Mexico.
The US Department of the Treasury is also in talks on a deal to prevent Seoul from deliberately pushing its currency lower to give South Korean exporters a competitive advantage.
A formal agreement on currency would be unprecedented, but it would include no enforcement mechanism.
The US trade deficit in goods with South Korea — nearly US$23 billion last year — widened after the original pact took effect in 2012, one reason Trump has denounced it.
Trade in cars has been especially lopsided: South Korea last year exported to the US 929,000 passenger vehicles worth US$15.7 billion.
By contrast, the US shipped to South Korea fewer than 53,000 cars, worth just US$1.5 billion, according to the US Department of Commerce.
The US has said South Korea has used non-tariff barriers, such as rigorous customs inspections, to block US products.
Trump’s complaints about South Korean trade practices have caused friction between the two allies at a crucial time, as he prepares for a meeting with North Korean leader Kim Jong-un.
Unions at South Korea’s two largest automakers, Hyundai Motor Co and Kia Motors Corp, have blasted the new agreement for blocking access to the fast-growing US pickup truck market.
“It is a humiliating deal that accepts Trump’s strategy to pre-emptively block South Korean pickup trucks,” Hyundai Motor Co’s labor union said in a statement.
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