US, S.Korea revise trade deal, Korean steel faces quota (updated)

KG DongbuSteel

26/03/2018 09:48

(Repeats to more subscribers)
    * US imposes steel import quota of 70 pct of 3-yr average 
    * US exempts tariffs on South Korean steel under quota 
    * South Korea is 3rd largest steel exporter to US
    * S.Korean steelmakers rally, Asian shares steady

    By Hyunjoo Jin and Joyce Lee
    SEOUL, March 26 (Reuters) - The United States and South
Korea agreed to revise a trade pact sharply criticised by U.S.
President Donald Trump, Seoul said on Monday, with U.S.
automakers winning improved market access and Korean steelmakers
hit with quotas but avoiding hefty tariffs. 
    The planned changes in the U.S.-Korea Free Trade Agreement
(KORUS) were seen as limited, leaving South Korea's key
passenger car exports untouched and helping soothe fears that
Trump's tough approach could start a spiralling global trade
war.  urn:newsml:reuters.com:*:nL4N1QQ1M8  urn:newsml:reuters.com:*:nL3N1R46S3 
    In April, Trump told Reuters he would either renegotiate or
terminate what he called a "horrible" trade deal that has
doubled the U.S. goods trade deficit with South Korea since
2012.
    Asian shares steadied on Monday, stemming last week's hefty
losses after Trump's action on steel and aluminium, and his
plans to slap tariffs on up to $60 billion in Chinese goods.
 MKTS/GLOB 
    The agreement means South Korea will be forced to cut its
steel exports to the U.S. by 30 percent of past three years'
average, in exchange for becoming the first U.S. ally to receive
an indefinite exemption on steel tariffs imposed by Trump. 
    "We had heated discussions," South Korean Trade Minister Kim
Hyun-chong said at a media briefing in Seoul. "The latest
agreement removed two uncertainties," he said, referring to
steel tariff exemptions and KORUS renegotiation. 
    Last week, Trump temporarily excluded six trade partners,
including Canada, Mexico and the European Union from higher U.S.
import duties on steel and aluminium which came into effect on
Friday. 
    South Korea has received a quota of about 2.68 million
tonnes of steel exports, or 70 percent of the annual average
Korean steel exports to the United States between 2015-2017,
which will be exempt from the new tariffs, the ministry said in
a statement. 
    South Korea is not allowed to export steel products
exceeding that quota to the U.S. market, a ministry official
said. 
    "This leaves a bad precedent of exchanging steel tariffs -
which is a breach of international trade law - for a legitimate
free trade agreement, in negotiations," said Wonmog Choi,
professor of law at Ewha Womans University. 

    TRADE WAR FEARS
    South Korea is the third-largest steel exporter to the
United States and the world's top importer of Chinese steel,
leading to concerns it was a conduit for China's excess
capacity. 
    Trump was elected in 2016 after promising to punish what he
saw as unfair trade practices by other countries, particularly
China. 
    While Trump was adamant the KORUS deal needed renegotiating,
the trade spat risked undermining relations between Seoul and
Washington at a crucial time, as Washington and Seoul work
closely to try to contain a nuclear-armed North Korea. 
    "We are at a time when U.S.-South Korea cooperation is
needed more than ever ahead of the inter-Korean summit and the
summit between North Korea and the United States," said a senior
official at South Korea's presidential Blue House, who was not
authorised to speak to media. 
    South Korean officials said that while the deal agreed was
the best they could hope for, further pressure on trade was
likely under Trump's presidency.
    "If President Trump becomes a two-term president ... I
believe there will be continuous (trade) risks during that
time," Trade Minister Kim said. 
    Shares in South Korean steelmakers rallied on Monday, with
Dongbu Steel  016380.KS  leading gains as tariff exemptions were
confirmed.  urn:newsml:reuters.com:*:nL3N1R805H 
    South Korea's steel association said in a statement it was a
"relief" that South Korea has been excluded from U.S. steel
tariffs, but regrettable it was unable to secure higher quotas. 
    
    AUTOS CONCESSION 
    As part of the KORUS revision, the countries agreed to
extend U.S. tariffs on Korean pickup trucks by 20 years until
2041.  urn:newsml:reuters.com:*:nL1N1P01T8
    No South Korean automakers currently export pickup trucks to
the United States, but Hyundai Motor  005380.KS  said last year
it planned to launch a model there to catch up with a shift away
from sedans.  urn:newsml:reuters.com:*:nL2N1L900Q 
    Hyundai said on Monday it was "too early to elaborate on the
details such as the estimated timing of the model release and
production location". Its shares fell 1.3 percent.
    Under KORUS revisions, U.S. automakers will be able to bring
into South Korea 50,000 vehicles per automaker per year that
meet U.S. safety standards, not necessarily Korean standards, up
from 25,000 vehicles previously. 
    Kim said no automakers previously exceeded the
25,000-vehicle threshold. Ford Motor Co  F.N  and General Motors
 GM.N  each shipped fewer than 10,000 vehicles last year.
    "I don't see a high chance of automakers expanding U.S.
imports," he said. 
    Kim Jong-hoon, a former chief negotiator for the KORUS FTA,
said South Korea had fared relatively well in negotiations.
    "South Korea gave concessions in autos in return for steel
tariff exemptions," he told Reuters. "This is not a free trade,
but a managed trade." 

 (Reporting by Joyce Lee and Hyunjoo Jin; Additional reporting
by Christine Kim
Editing by Lincoln Feast)
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net))