After three months of talks,...
South Korea and the U.S. have officially reached an agreement in principle on the terms of
amending their FTA.
We have our business correspondent Kim Hyesung in the studio with us.
Hyesung, it seems both sides are happy with the concessions they've managed to squeeze
out of each other...
Yeah, that's right.
Seoul's trade minister Kim Hyun-chong and U.S. Trade Representative Robert Lighthizer
released a joint statement Wednesday night local time, saying the two countries were
pleased to announce the amendment, which addresses issues on investment, tariffs and trade remedies.
This was somewhat expected, given that Trade Minister Kim announced last weekend at Incheon
International Airport that the two sides had reached an agreement after weeks of back-to-forth
flights to Washington for formal and informal talks.
The White House also said on Tuesday local time that the two sides had reached an agreement
in principle.
What is surprising, however, is the speed of the trade negotiations.
The U.S. signaled its willingness to possibly amend the deal last summer, but Seoul and
Washington formally started the talks in January, and came to a deal after just three months.
Look at NAFTA renegotiations,...it began last August, but the U.S., Canada, and Mexico have
yet to come up with a tentative agreement on their 24-year-old-deal after six rounds
of talks.
Yeah, you could argue that NAFTA is a much more complex and established deal... and there
are also three parties involved with that one, but there's no denying this was quick.
Why do we think it was all sorted out so fast?
Well,... there's a combination of factors.
President Trump had pledged to amend or scrap the free trade agreement during his election
campaign, criticizing it as a horrible deal, pointing out America's trade deficit with
South Korea.
So he wanted to wrap up the amendment soon to show his supporters before the mid-term
elections in November.
South Korea also wants to lower uncertainty, with regards to trade with the U.S., its second
largest trading partner,...and steel and aluminum tariff measures, as South Korea is the third
largest steel exporter to the U.S.
In addition, the ongoing North Korea issue means closer cooperation from Seoul and Washington
is needed, so the two wanted to wrap up the amendment soon.
In the joint statement, it actually said quote "This represents important progress in improving
Korea-U.S. trade and economic relations, based on their strong and enduring security relationship."
And at the end of the day, both are somewhat satisfied with the deal, calling the deal
"a win-win" for both sides.
Everyone is feeling good about the changes then.
Just walk us through some of the specific amendments.
Yes, the amendments to the KORUS FTA address areas like investment, tariffs, trade in automobiles,
and trade remedies.
Seoul has agreed to lift some its safety and environmental regulations, and allow U.S.
automakers to ship Korea up to 50-thousand vehicles each, up from 25-thousand previously.
Tariffs imposed on Korean pickup trucks exported to the U.S will be extended by 20 years to
2041.
South Korea on the other hand, secured revisions to the investor-state dispute settlement clause
and other areas it has demanded since start of the trade talks, like agriculture.
There will be no further opening of South Korea's agricultural sector or mandatory use
of U.S. auto parts, which Trade Minister Kim said was a redline Seoul would defend.
Along with the FTA amendment, is an agreement on exempting South Korea from the Trump administration's
25-percent steel tariff measures.
In exchange, South Korea's quota will be set at 2-point-6-8 million tons of steel exports
a year, or 70 percent of its average annual shipments to the U.S. between 2015 to 2017.
The arrangement with respect to steel products is expected to take effect on May 1st.
Working-level officials are ironing out the details so that Seoul and Washington can finalize
their amendments to the six-year-old trade deal soon, which are subject to domestic procedures
in both countries before provisions can be brought into force.
Ok, sounds good.
Thank you Hyesung for the report.
My pleasure.
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