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Bumpy road ahead for S. Korea-US FTA renegotiation: senior official

Yonhap | 15 January 2018

Bumpy road ahead for S. Korea-US FTA renegotiation: senior official

A bumpy road lies ahead for the renegotiation of the free trade deal between South Korea and the United States, a senior trade official said Monday, with the second round of talks to amend their free trade pact expected to be held later this month at the earliest.

Earlier this month, Seoul and Washington held their first round of renegotiation talks in Washington to revise the 5-year-old deal, but both sides failed to narrow differences on key issues, such as automotive parts.

"We will stick to the basic stance that Seoul would amend the deal in a way that addresses the trade imbalance," Kang Sung-cheon, deputy minister for trade, told reporters here.

"There are clear differences on the Korea-U.S. FTA and import regulations ... and the follow-up session will be held later this month or early February in Seoul," he said.

Kim Hyun-chong, Seoul’s trade minister, said earlier he expects growing pressure from the United States in the upcoming FTA renegotiation talks as President Donald Trump could ratchet up his rhetoric ahead of the first anniversary of his inauguration to appeal to his core base.

The trade minister also said Seoul will seek to revise the investor-state dispute settlement (ISDS) clause and explore ways to protect the agriculture industry, which has suffered from the implementation of the FTA.

With the ISDS provision, investors can sue countries for alleged discriminatory practices through international arbitration bodies. Local experts have expressed concerns that large multinational companies could exploit the clause, leading to the infringement of South Korea’s judicial sovereignty.

The Korea-U.S. FTA renegotiation talks come at a time when the U.S. is pushing for a series of protective trade measures, including safeguard actions on Korean washers and anti-dumping duties on steel and chemical products.

Later this month, the U.S. Commerce Department is expected to release "Section 232" investigations on steel and aluminum on national security grounds, which could lead to broad tariffs or quotas on imports from China and South Korea.

In November, the U.S. International Trade Commission recommended a 50 percent tariff on large residential washers built by Samsung and LG exceeding the 1.2 million unit quota.

If Trump approves the safeguard measures triggered by the U.S. company Whirlpool, it will be the first such action since 2002, when the administration of George W Bush imposed 8-30 percent duties on imported steel.

Seoul officials also anticipate increased pressure on the auto industry, which takes up a large part of the trade surplus with the U.S. About 80 percent of South Korea’s trade surplus came from the auto sector in 2016.

Industry officials said the percentage of U.S. auto parts used by South Korean carmakers could become an important issue. This is also a thorny issue for the U.S. in ongoing North American Free Agreement negotiations with Canada and Mexico.

While the FTA has boosted auto trade between the two nations, South Korean companies have enjoyed greater benefits thanks to the bigger size of the U.S. auto market, which is about 10 times that of the domestic market.

South Korea’s auto exports to the U.S. jumped 80 percent from 2011 to $18.49 billion in 2015, while its imports of American-made cars soared 380 percent from 2011 to $1.68 billion in 2015, according to government data.

The U.S. in 2016 accounted for 30 percent of the auto exports of Hyundai Motor Co., South Korea’s top automaker, and its sister company, Kia Motors Corp. Together, the two companies, which belong to Hyundai Motor Group, constitute the fifth-largest automaker in the world in terms of sales.

 source: Yonhap