BUSINESS

Korea, US begin 2nd round of FTA talks

By Yonhap
  • Published : Jan 31, 2018 - 09:44
  • Updated : Jan 31, 2018 - 09:44
South Korea and the United States on Wednesday began their second round of talks to amend their free trade agreement, amid rising trade tensions between the two nations over Washington slapping steep tariffs on washers and solar panels.

The two-day talks come a week after US President Donald Trump signed safeguard tariffs on foreign washers and solar panels, including those from South Korea, saying the measures would protect American jobs.

The Seoul government is expected to raise the topic of US safeguard measures at the negotiating table, as it is seeking consultations with Washington over the heavy duties, which are set to take effect on Feb. 7.

"As we broadly exchanged matters of concern during the last talk, (the two sides) are expected to have more detailed discussions on each side's main interests at this meeting," Yoo Myung-hee, director-general of the trade ministry's trade policy bureau, told reporters before meeting her U.S. counterpart, Assistant Trade Representative Michael Beeman. "Trade remedies are important for us, so we will raise the issue."

South Korea and the United States hold the second round of talks to amend their free trade agreement at Lotte Hotel in Seoul on Jan. 31, 2018. (Yonhap)

Under the safeguard measure, a 20 percent tariff will apply on the first 1.2 million washers imported in the first year and a 50 percent tariff on machines beyond that number. A 30 percent tariff will be imposed on imported solar cells and modules above 2.5 gigawatts in the first year.

Unless the matter is settled through the bilateral consultations, South Korea's trade ministry said it will be compelled to file a suit with the World Trade Organization and seek compensation for damages suffered by Korean companies.

Following the first talk, held in Washington on Jan. 5, South Korean Trade Minister Kim Hyun-chong said he expects growing pressure from the US in the upcoming negotiations, as the Trump administration wants a quick fix for the KORUS FTA amid frustration over the slow pace of talks to revamp the North America Free Trade Agreement with Canada and Mexico.

Kim, who served at the WTO's appellate body, said Seoul will seek to revise the investor-state dispute settlement clause and explore ways to protect the agriculture industry, which has suffered since the implementation of the FTA.

With the ISDS provision, investors can sue countries for alleged discriminatory practices through international arbitration bodies. Local experts have expressed concerns that large multinational companies could exploit the clause, leading to the infringement of South Korea's judicial sovereignty.

Seoul officials also anticipate increased pressure on the auto industry, which accounts for about 80 percent of the trade surplus with the US

Industry officials said the percentage of US auto parts used by South Korean carmakers could become an important issue. This is also a thorny issue for the US in ongoing NAFTA talks.

While the five-year-old trade deal has boosted auto trade between the two nations, South Korean companies have enjoyed greater benefits thanks to the bigger size of the US auto market, which is about 10 times that of the domestic market.

South Korea's auto exports to the US jumped 80 percent from 2011 to $18.49 billion in 2015, while its imports of American-made cars soared 380 percent. (Yonhap)

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