hankyoreh

South Korean Trade Minister Kim Hyon-chong briefs the press on progress for amending the KORUS FTA and on South Korea’s response to the US steel tariffs at the Central Government Complex in Seoul on Mar. 26. (Yonhap News)

“These are just the second round of talks, so there’s a long way left to go. It looks like we’re going to need to have more negotiations,” said South Korean Trade Minister Kim Hyon-chong soon after the second round of KORUS FTA amendment negotiations on Feb. 1.

Despite Kim’s implication that a deal between the two sides was still far off, recent progress in South Korea-US Free Trade Agreement (KORUS FTA) amendment negotiations suggests that a final resolution may be imminent. The dramatic turnaround may mean a deal is in sight three months after the negotiations began on Jan. 5, with the abrupt emergence of steel tariff exemptions as a trade issue and the KORUS FTA becoming directly linked to the steel issue.

“Minister for Trade Kim Hyun-chong and KORUS FTA chief negotiator Yoo Myung-hee held late-stage negotiations in Washington through Mar. 24. They’re almost finished,” a senior official at the Office of the Minister for Trade (OMT) told the Hankyoreh in a Mar. 25 telephone interview.

South Korea’s working-level KORUS FTA negotiation team has reportedly stayed behind in Washington for final confirmation and reviewing of the agreement content and begun drafting of a joint announcement.

The specifics of the negotiations’ outcome are scheduled to be announced by Kim in a press conference after a report to the South Korean Cabinet on the morning of Mar. 26. Meeting with reporters at Incheon International Airport on the afternoon of Mar. 25, Kim said South Korea “obtained five main things with this agreement.”

“We eliminated the uncertainty [about whether the KORUS FTA would continue] early on, we stuck to agriculture as our ‘red line,’ US demands on a mandatory percentage of US-produced automobile parts and place-of-origin recognition were not reflected, and there was no retreat on [abolition of] existing tariff concessions,” he explained, sending the clear message that there will be no additional opening of the agricultural sector.

But with the amendment negotiations becoming directly linked this month to the matter of exemptions for South Korea on steel tariffs, the South Korean side faced an unfavorable framework and conditions for the talks, and many are already raising questions about whether the team’s repeatedly stated goal of “an increased balance of interests between the two sides” was actually achieved. Some trade experts maintain that defending the balance of interests was an uphill battle from the beginning, with the negotiations unilaterally initiated by the US and South Korea being first to demand a start after judging US President Donald Trump’s references to “abandoning” the FTA to represent a real threat.

Analysts have speculated that with the South Korean side already at a disadvantage, its best response may have been to hurry up and conclude the talks once it was able to argue that it had managed to secure the steel exemptions – avoiding a scenario where it could have lost steel too after its concessions on automobiles.

The US has reportedly pushed for a “small package deal,” gradually narrowing the scope of the negotiations while regarding reductions in the trade imbalance – including a large decline in its trade deficit from US$23.2 billion in 2016 to US$17.9 billion last year – as the attainment of its practical goal with the talks. The South Korean side reportedly hinted at the possibility of imposing legitimate retaliatory tariffs on beef and other imported US agriculture and livestock product, while arguing that the US had nothing to gain from more sweeping amendments and an outcome involving unilateral concessions from the South Korean side, which would leave domestic ratification increasingly unlikely and further complicate the amendment process.

On that basis, the two sides narrowed the focus from the second round of negotiations to areas raised as major focuses of US interest, with an automobile subcommittee addressing automobile imports and exports; a trade relief measures subcommittee focusing on washing machine and solar panel safeguards, steel tariffs, and other trade issues; and another subcommittee focus on changes to the existing tariff concession schedules for various trade items. But with washing machine safeguards, steel tariffs, and other trade issues showing up at the negotiating table, the talks have become more of a “proxy battle” to resolve trade concerns between the two sides than an amendment process for the FTA text.

By Cho Kye-wan, staff reporter

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