KORUS Modifications Agreed; Korea Gets Steel Tariff Exemption
The U.S. and South Korea have reached an agreement in principle on modifications to be made to their bilateral free trade agreement. The two sides also announced that Korea will be exempt from the 25 percent additional tariff the U.S. began imposing on imported steel products March 23. No similar agreement appears to have been concluded with respect to the U.S.’ additional 10 percent tariff on aluminum.
According to press reports, the two primary modifications to be made to KORUS deal with automobiles, a sector in which the U.S. runs a substantial trade deficit with Korea. Specifically, Seoul agreed to give the U.S. an additional 20 years, until 2041, to phase out its 25 percent tariff on trucks imported from Korea, although press sources note that Korea does not currently export such vehicles to the U.S. Korea will also double to 50,000 the number of automobiles allowed to be imported from the U.S. even if they do not meet Korean safety standards, although according to press sources no single U.S. automaker yet ships more than 10,000 vehicles to Korea in a given year. Korea offered no additional market access for U.S. agricultural products and officials said there were no changes to previously agreed tariff eliminations.
In what appears to be a related move, the U.S. agreed to exempt South Korea from its national security-related tariffs on imported steel provided Korea limits such shipments to 70 percent of their average between 2015 and 2017, or about 2.7 million tons.