South Korea earned an exemption from the U.S. heavy tariffs on steel imports in a deal to revise their six-year-old free trade agreement (FTA), Seoul's trade minister said Monday.
Trade Minister Kim Hyun-chong told a press briefing that the U.S. side agreed to exempt South Korea from imposing new tariffs on steel imports, saying it removed uncertainty of local steelmakers about exports to the United States.
Under the agreement, South Korea will continue to be exempted from the U.S. duty of 25 percent on steel imports even after the temporary deferment ends on May 1.
The U.S. Department of Commerce recommended to U.S. President Donald Trump imposing a 53 percent tariff on steel products imported from 12 countries, including South Korea.
While negotiations were underway, Washington granted a temporary deferment to seven countries, including South Korea, on steel import restrictions. Seoul had negotiated with the U.S. side on the new tariffs and the bilateral free trade pact that took effect in 2012.
In return for the exemption, Seoul accepted the U.S. call to set an import ceiling on South Korean steel products at 2.68 million tons per year, or 70 percent of South Korea's average steel exports to the United States for three years through 2017.
The import quota is equivalent to 74 percent of last year's South Korean steel exports to the United States. Seoul is the third-largest steel exporter to Washington.
By linking the negotiations on steel import duties to the renegotiation on South Korea-U.S. FTA, the two allies have "in principle" reached an agreement to the revised free trade deal except some technical issues.
To avoid the heavy steel import duties, South Korea allowed U.S. automakers a greater access to its domestic market by easing environmental, safety regulations and extending the U.S. tariffs on South Korean pickup truck imports.
Under the current FTA, the United States is required to remove a 25 percent import tariff on South Korean pickup trucks by 2021. The modified deal will extend the tariff by 20 years to 2041.
Under the modified FTA, South Korea will allow each U.S. carmaker to export up to 50,000 vehicles per year meeting the U.S. safety regulations, though not meeting the South Korean regulations. It was up from 25,000 vehicles under the current deal.
South Korea also agreed to set its regulations on fuel efficiency and greenhouse gas emissions according to global trend and U.S. standards.
The South Korean trade minister said the U.S. side focused on the auto sector as car and auto parts accounted for 74 percent of South Korea's surplus in trade with the United States in 2017.
Though Seoul accepted Washington's call for greater access to the local automobile market, South Korea made no concession in the agriculture sector, the minister said.
He noted that although up to 50,000 U.S. cars meeting the U.S. safety regulations will be imported under the fresh deal, major U.S. automakers exported fewer than 10,000 vehicles to South Korea last year.
Seoul and Washington began renegotiations on their free trade pact from January as U.S. President Donald Trump called it a "horrible" deal.
Three rounds of negotiations to revise the South Korea-U.S. FTA had been held for the past three months.