President Donald Trump of the United State of America has secured his first major trade deal with South Korea ahead of planned nuclear talks with North Korea.
The Trump administration said on Tuesday that the United States and South Korea had agreed to revise their six-year-old trade pact.
Officials said the revised deal widened US access to South Korea’s car market while providing American manufacturers protection from South Korean imports.
Trump had previously 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 American products and extends a 25 percent US tariff on South Korean pickup trucks until 2041.
South Korea escapes the new 25 percent tariff on imported steel but must accept quotas on steel shipments to the United States.
The agreement, cobbled together quickly with only a few rounds of negotiations under Trump’s threat of withdrawal, will include a side-letter that requires South Korea to provide increased transparency of its foreign exchange interventions, with commitments to avoid won devaluations for competitive purposes.
The currency deal, final details of which are still being negotiated between the U.S. Treasury and South Korea’s Ministry of Strategy and Finance, is considered a ‘side letter’ that will not be enforceable with trade sanctions.
Many US lawmakers, particularly Democrats, had opposed the 2015 Trans-Pacific Partnership trade deal because it had a similar currency manipulation side-agreement that could not be enforced.
Nonetheless, the revised US-South Korean Free Trade Agreement, known as KORUS, would be the first US trade deal in force with a currency side-deal, and would not need congressional approval, the officials said.
The officials confirmed that South Korea agreed to cut its steel exports to the United States by about 30 percent in exchange for the rest being excluded from steel tariffs. Korean aluminum producers would still be subject to Trump’s 10 percent tariff on aluminum.
Other countries also must agree to similar quotas to escape tariffs, but the size of the limits would vary. The United States is negotiating with Canada, Mexico, Brazil, the European Union, Australia and Argentina.
One official said it was ‘not a one-size fits all kind of thing’ and added that the South Korean quota was agreed due to its ‘unique’ position in steel exports. South Korea imports and processes significant amounts of Chinese-made steel, much of which is under anti-dumping and anti-subsidy tariffs.
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