The U.S. and South Korea seem to have finally resolved the trade disputes tearing at the alliance.
South Korean Trade Minister Kim Hyun-chong announced Monday that the U.S. and South Korea have agreed to amend the six-year-old Korea-U.S. Free Trade Agreement (KORUS), a trade agreement President Donald Trump has long criticized as a “horrible” deal. The two sides also agreed that South Korea should receive a permanent exemption from the steel tariffs Trump announced earlier in March.
South Korea is America’s sixth-largest trading partner and is among the largest exporters of steel to the U.S., yet concerns about a the growing trade deficit with South Korea has led the Trump administration to consider pulling out of KORUS, as well as threaten an ally with tough tariffs.
Seoul has agreed to double the import quota on American-made cars, as well as reduce the total amount of steel it exports to the U.S. annually by adhering to a quota of 2.68 million tons of steel (roughly 70 percent of its average for the past three years). Limited access to the South Korean market for American automakers has long been a contributing factor as the trade deficit expanded to $23 billion.
The U.S. imported $16 billion worth of South Korean passengers but exported only $1.5 billion American vehicles, according to CNN Money. Whether the changes to the bilateral trade agreement will improve this situation remains unclear, especially considering reports that the U.S. was exporting below the import quota.
While a number of countries have received temporary exemptions from the steel and aluminum tariffs, South Korea is the first country to complete the necessary negotiations for permanent exemption.
The resolution of these trade disputes, which have created tension in an important bilateral relationship at a crucial time in dealings with North Korea, allow the U.S. and South Korea to face North Korea from a more stable, unified position. Monday’s agreement may send a better message to North Korea ahead of the summit meetings with Kim Jong Un.
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