United States and South Korea reach agreement on trade, steel tariffs

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Mnuchin called the agreement "an absolute win-win".

Seoul has agreed to a quota for steel exports to the USA 30 per cent below current sales and accepted extended tariffs on pick-up trucks to secure a revised trade deal with Washington and escape its steel duties, the government admitted yesterday.

Seoul and Washington have reached a tentative agreement to revise their six-year-old trade deal, which focused on providing easier access to the Korean market for American vehicles.

In a statement published Monday, the South Korean Trade Ministry said it had agreed to adhere to a quota of 2.68 million tons of steel exports to the United States a year, which it said was roughly equivalent to 70 percent of its annual average sales to the United States from 2015-17. They came as a relief to South Korean industries, although the steel companies said they had wanted a larger quota of tariff-free exports to the United States.

"I think the strategy has worked, quite frankly", Steven Mnuchin, the Treasury secretary, told Fox News in an interview Sunday. We said we were going to proceed.

The loosened safety inspection regulations are likely to result in an increase in German and Japanese vehicle exports from the U.S.to South Korea. "The automobile sector is the only one that had to make a concession during each of the two KORUS FTA revisions following its implementation in 2007", said an anonymous expert.

Korea's trade surplus with the United States was about $18bn previous year, down from $23bn in 2016, according to the Korea International Trade Association. Cars account for more than 70 percent of the surplus.

Korea, meanwhile, has also expanded the tariff removal for imports of U.S. trucks and expanded some flexibility for automobile safety and environment standards, according to the ministry officials.

But this is unlikely to lead to a tangible change in consumer demand. European cars account for nearly 80 percent of the imported-vehicle market.

South Korea and the United States also agreed that U.S. tariffs on Korean pickup trucks will remain in place until 2041, extended by 20 years from the previous phase-out schedule of 2021.

While the United States posted a trade surplus of $10.7 billion with South Korea in the services sector, it recorded a goods trade deficit of $27.7 billion in 2016, leaving an overall deficit of $17.0 billion.

Trump, who made the comments during a press conference to mark his signing of a United States dollars 1.3 trillion spending bill, has long complained about the trade deal with South Korea.

"The Trump administration needed to harvest an outcome from the negotiation to show its supporters", he added, warning that Washington could in future "slap tariffs on semiconductors" - a crucial South Korean export.