The United States and South Korea on Friday completed the first round of review talks on a bilateral trade deal with Washington saying there was “much work to do” to reach a new pact.
Since taking office, President Donald Trump has pulled the U.S. out of talks on a 14-nation Asia-Pacific trade pact, started negotiations on a new deal for the North American Free Trade Agreement between the U.S., Mexico and Canada and initiated a review of the 2012 Korea deal.
Washington has taken a hard line in the NAFTA talks, which appear stalled with just two rounds of negotiations left, saying that concessions are the only way for Canada and Mexico to keep the deal.
Strike a balance
The Korea trade talks will have to strike a balance between Mr. Trump’s domestic agenda and the need to contain a nuclear-armed North Korea. A swift agreement would have aided that, officials from both sides told Reuters.
The U.S. goods trade deficit with South Korea has doubled since the 2012 signing of the U.S.-Korea Free Trade Agreement (KORUS). Almost 90% of the 2016 shortfall of $27.6 billion came from the auto sector, an issue the U.S. is expected to press hard in the Washington talks.
A quick Korea deal could give Mr. Trump his first trade victory at a time when NAFTA negotiations are dragging on and pressure on China to change trade practices has yielded little progress.
The talks, led by Assistant U.S. Trade Representative Michael Beeman and Yoo Myung-hee, director general for FTA negotiations at South Korea’s trade ministry, begin at a time of heightened tension with Pyongyang.
The U.S. had primarily raised the issue of the automobile sector, Ms. Yoo told reporters after the first round of talks, Yonhap News Agency said.
A top priority for the Americans is maintaining a tariff of 25% on imports of Korean pickup trucks, which the existing deal envisaged to be phased out from 2019, according to a U.S. official and a South Korean car industry source. South Korea has two major automakers, Hyundai Motor and Kia Motors, that rely heavily on exports because of the small size of the domestic market. Critics say South Korea discriminates against imports with a range of non-tariff barriers.
South Korean auto companies believe Washington will also seek to increase the 25,000-vehicle per U.S. automaker threshold for U.S. car shipments to South Korea that can enter the country without meeting domestic industry regulations. The official at a South Korea auto company, who was not authorized to speak to the media, also said the U.S. was interested in easing Seoul’s vehicle emissions targets. These are viewed as discriminating against U.S. autos.
Since Kim Jong Un took power in North Korea, Pyongyang has run a series of increasingly powerful nuclear tests and ballistic missile launches, drawing ever tighter sanctions and a freeze on contacts between the two Koreas. This month, however, Seoul agreed to high-level talks with the North in response to a speech in which the North Korean leader offered an opening to diplomacy.
Pyongyang has a long history of seeking to play off Seoul and Washington as well as Beijing and Moscow in its diplomacy.
Washington is wary of separate approaches and there are concerns that disagreements over KORUS could fuel a rift between South Korea and the U.S.
