Seoul presses Washington on tariff exemptionTrade, Industry and Energy Minister Paik Un-gyu said the government will try to persuade Washington to exempt it from the 25 percent steel tariffs. If it fails, it will consider bringing the issue to the World Trade Organization.
“The problem is that the U.S. government suspects us of indirectly exporting Chinese steel despite our repeated assurances that we are not,” Minister Paik said Friday. The minister said Seoul was disappointed with the United States’ decision.
Korean trade envoy Kim Hyun-chong is in Washington meeting with White House officials including Commerce Secretary Wilbur Ross and Trade Rep. Robert Lighthizer to persuade them to exempt Korea from the tariffs.
“The [steel and aluminum] tariff issue is in progress at the same time as the renegotiation of the bilateral free trade agreement,” said Paik. “We will continue to cooperate with the U.S. so that the [FTA] negotiation is directed in a way to minimize any damages.”
In a statement released Friday, the trade ministry said it is consulting with other economies that have been affected by the U.S. decision including the European Union on the possibility of taking action at the WTO. It is encouraging countries to refrain from trade protectionist policies during the WTO trade ministers meeting to be held between March 19 and March 20 in New Delhi and the G-20 Finance Ministers meeting in Buenos Aires on March 19.
On Thursday, President Donald Trump held a ceremony and signed a proclamation that imposes 25 percent tariffs on imported steel and 10 percent tariffs on imported aluminum. He was surrounded by U.S. steel workers.
Canada and Mexico were exempt because of ongoing Nafta negotiations.
“I have a feeling we’re going to make a deal on Nafta,” the U.S. President said. “And if we’re making the deal on Nafta, this will figure into the deal and we won’t have the tariffs on Canada or Mexico.”
Trump said the U.S. has finally started taking overdue action to correct a longstanding problem.
“It’s a travesty,” Trump said.
The White House previously said no country would be exempt from the tariffs. The change opened the possibility of Korea getting off the list.
“If the same goals can be accomplished by other means, America will remain open to modifying or removing the tariffs for individual nations, as long as we can agree on a way to ensure that their products no longer threaten our security,” Trump said.
The higher tariff is expected to have a major impact on the Korean steel industry.
Hyundai Research Institute estimated that after the tariffs, Korea’s steel exports to the U.S. could decline $880 million per year. If so, steel exported to the U.S. this year could fall 21.9 percent to $3.14 billion.
Steel accounts for 5.9 percent of all goods exported to the U.S. while aluminum accounts for only 0.3 percent. Last year steel exports increased nearly 15 percent to $4 billion while aluminum exports rose 10 percent to $200 million.
Choi Nam-suk, a Chonbuk National University professor of international trade, estimated that in the next five years, the Korean steel industry could see a loss of $2.4 billion if the 25 percent tariff is applied and 13,029 jobs will be lost.
And that could be just the start, said Choi. U.S. protectionist sentiment could spill over to other products that Korea excels in including semiconductors and automotive parts.
If those two industries are also hobbled, the losses over five years could swell to $6.8 billion with 45,251 jobs lost.
According to Nomura, Korea is one of the countries most reliant on the U.S. market for its exports. Vietnam topped the list - 20.3 percent of its exports go to the U.S. - followed by Canada with 17.5 percent and Taiwan with 12.5 percent. Korea ranked ninth with 8.1 percent.
BY LEE HO-JEONG [firstname.lastname@example.org]