South Korea and the United States have reached an agreement on how to revise their bilateral free trade agreement (FTA). Seoul has also gained exemption from U.S. steel tariffs.
A day after returning from Washington, Trade Minister Kim Hyun-chong held a press briefing Monday to announce the result of his four-week trip.
He said that South Korea has defended the red line that there won't be additional liberalization of the agricultural sector and the use of U.S. auto parts will not be made compulsory.
The two countries agreed to extend a 25 percent tariff on imports of Korean pickup trucks by 20 years until 2041.
Korea will also import more American cars without requiring them to comply with domestic regulations, allowing 50-thousand vehicles to enter the local market -- double the current 25-thousand threshold.
Eased vehicle emission standards will also be applied for cars shipped to Korea from 2021 to 2025.
In return, the U.S. will exclude South Korea from a 25 percent tariff on steel products, while reducing the import volume of Korean steel to 74% of last year's level.
Minister Kim said that Seoul was able to resolve uncertainty for local steelmakers at an early stage by being the first country to negotiate an exemption from U.S. steel tariffs.
Washington initially considered imposing a 53 percent duty on Korean steel which holds the third largest share of America's imported steel market.
On the FTA negotiations, the trade ministry said that South Korea managed to retain the basic framework of the trade deal and swiftly reach an agreement, thereby preventing prolonged negotiations which could have increased uncertainties.
Though trade issues with the U.S. are resolved, the local economy still faces another risk, namely a possible trade war between the U.S. and China.
Washington has decided to impose 25% tariff on 50 billion dollars worth of Chinese imports.
China will counter this move with high tariffs on U.S. goods such as pork, fruit and steel pipes.
If as a result, Chinese exports to the U.S. drop by about ten percent, this is expected to decrease South Korean shipments to China by over 28 billion dollars which is about 20% of total Korean exports to China posted last year.