A swift dealThe trade conflict between Korea and the United States triggered by President Donald Trump’s strong push for protectionism as forewarned by his America First policy appears to have been mended for the moment. Both countries’ trade representatives struck a deal last weekend in a complex negotiation to link U.S. tariffs on Korean steel to a renegotiation of the 2012 Korea-U.S. free trade agreement between the Lee Myung-bak administration and the Barack Obama administration.
In the deal, Korea does not have to further open up its agricultural market — a very sensitive issue on Korea’s part — to U.S. agricultural products, with previous concessions remaining intact. While the United States agreed to exempt Korea from its new mandatory 25 percent tariffs on steel imports from Korea, Seoul consented to the idea of reducing its steel exports to the United States this year to 74 percent of the amount exported last year. Then Korea made concessions in automobiles. The United States has long insisted on Korea importing more American cars even before the free trade pact was signed.
Through the new agreement, Korea was able to remove uncertainties over its exports to U.S. markets. It is a welcome development for Seoul to reach an agreement with Washington in just three months. On Monday, the Korea International Trade Association made a statement that Korean companies will be able to draw up their trade and investment strategies toward the United States in a stable way and on a long-term basis since both sides swiftly eliminated uncertainties through the renegotiation of the free trade agreement.
Trade Minister Kim Hyun-chong, Korea’s chief negotiator, said he had approached the negotiation in an aggressive way from the beginning. Even though his team had to accept the renegotiation in the face of Trump’s protectionist offensive, experts say his team did a pretty good job. However, immediate damage is expected for our steel pipe exports to the United States. That will adversely affect our steel industry, which heavily depends on U.S. markets.
Regardless of the agreement in Washington Sunday, Korea can be a target of American protectionism at any time given its big trade surplus with the country. If trade friction between Washington and Beijing reaches a peak, Korea will most likely be hit hard. Even before Washington and Beijing entered any kind of negotiations, the foreign news media reported that China will increase its purchase of semiconductors from the United States. That will have a huge impact on our exports of semiconductors to China.
To deal with the trade conflict wisely, the government must act in a preemptive way if it does not want to fall victim to fallout from many sides.
JoongAng Ilbo, March 27, Page 30