South Korea and US begin second round of negotiations for amending KORUS FTA

Posted on : 2018-02-02 18:23 KST Modified on : 2019-10-19 20:29 KST
Major issues such as washing machine import safeguards are currently being discussed
South Korean and US negotiators begin the second round of discussions for revising the KORUS FTA at the Lotte Hotel in the Sogong neighborhood of Seoul on Jan. 31. (provide by Ministry of Trade
South Korean and US negotiators begin the second round of discussions for revising the KORUS FTA at the Lotte Hotel in the Sogong neighborhood of Seoul on Jan. 31. (provide by Ministry of Trade

South Korea and the US discussed major trade issues such as washing machine import safeguards during negotiations to amend their Free Trade Agreement (FTA), with each showing carefully crafted strategies to bring concessions from the other side. The second day of the second round of negotiations at the Lotte Hotel in Seoul’s Sogong neighborhood on Feb. 1 saw negotiation teams from both sides battling over the issue of US safeguards on South Korean washing machines and solar cells and modules.

The South Korean team, headed by Trade Policy Bureau director-general Yoo Myung-hee, reportedly expressed extreme displeasure with what it called an “incomprehensible” decision by the US to apply safeguards on washing machines made at South Korean factories after the two sides voluntarily signed an agreement for free trade. It also emphasized that the US trade deficit of US$17.97 billion last year was down significantly from the US$23.25 billion recorded in 2016, and that the US$320 million surplus last month was down sharply from US$970 million in Jan. 2017. Its argument was that with imports of US predicts rising sharply and the trade imbalance declining, the US should withdraw or relax its safeguards in response.

“There were very heated negotiations between the two sides. We were forceful in addressing the unfairness of the safeguards,” said South Korean Minister for Trade Kim Hyun-chong later that evening after the negotiations.

“Both sides would like to wrap the negotiations up as quickly as possible, but this is still just the second round, and it looks like we’ll have to negotiate some more,” Kim said.

The negotiators also reportedly demanded an exemption for South Korea from imminent US trade regulations on imports of steel products. US President Donald Trump is set to make a final decision shortly on whether to impose regulations on steel in addition to washing machines. The South Korean side was reported as arguing that South Korea’s status as a US security ally meant that imports of South Korean-made steel do not have a negative impact on US security.

In terms of Seoul’s policy sovereignty, the South Korean side also reportedly demanded revision of the agreement to improve investor-state dispute system (ISDS) provisions and limit the US executive’s discretionary authority to make complaints.

Meanwhile, the US team, headed by Assistant US Trade Representative Michael Beeman, focused on demands for the partial or total removal of non-tariff barriers to market access for US-made imported cars, including safety and environmental regulations.

The South Korean and US teams also discussed adjustments to tariff concessions for automobiles and automobile parts, which are already duty-free in both markets. In their negotiations, the two sides focused on discussions in three to four major areas: automobiles; anti-dumping measures, safeguards, and other trade regulations; ISDS; and tariff concessions on goods.

In terms of trade regulations, the South Korean side took issue in particular with US institutions and practices for calculating anti-dumping tariff rates. The two sides also reportedly exchanged plans to adjust the current tariff removal and lowering schedule for hundreds of goods where tariffs remain in place six years after the FTA took effect.

“We traded views on tariffs for other products besides cars,” Kim said.

Wendy Cutler, the former deputy US Trade Representative who served as chief US representative when the FTA was negotiated in 2007, spoke the same day at a roundtable on the FTA’s prospects organized by the Korea Economic Institute (KEI). In her remarks, Cutler said the US decision to impose safeguards on South Korean washing machines and solar cells and modules “could set a cloud over the negotiations.”

By Cho Kye-wan, staff reporter

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