South Korea and the United States made some progress in the third round of negotiations to amend their free trade agreement (FTA) on key issues, and will continue to talk about Washington's proposed steel tariff, Seoul's trade ministry said Saturday.
Yoo Myung-hee, a South Korean deputy minister for FTA negotiations at the Ministry of Trade, Industry and Energy, ended two-days of talks with her US counterpart, Assistant Trade Representative Michael Beeman, in Washington, D.C. amid heightened trade tensions between the two nations.
Steel coils (EPA-Yonhap)
The latest FTA talk has drawn keen attention as it overlaps with the ongoing negotiations to get Seoul exempted from Washington's 25 percent tariff on imported steel, which is expected to deal a heavy blow to Korean exporters.
The Korean side brought the steel issue to the negotiating table, along with other trade remedy issues, such as safeguards and anti-dumping duties, while American negotiators focused on market access and tariffs in the automotive sector and origin of goods, according to multiple sources.
"The two sides made some headway in some of the key issues and agreed to promptly conduct follow-up negotiations," the ministry said in a statement, without elaborating on details. "The partners will continue to talk about the (US) steel duties."
The Korean negotiators will stay in Washington to make last-ditch effort to get critical exemptions from the steel duties, which are set to take effect Friday (local time), Yoo said. Seoul has repeatedly asked the Trump administration to get its steel products exempted but has not been successful so far.
South Korean Trade Minister Kim Hyun-chong has been in Washington to meet with American policymakers and officials, including US Trade Representative Robert Lighthizer, as part of outreach efforts.
US President Donald Trump last week signed off on a plan to impose 25 percent tariffs on steel imports, giving temporary exemptions for Canada and Mexico, while the U.S. and its neighbors renegotiate the North American Free Trade Agreement (NAFTA).
As Washington is seen as using the tariffs as leverage to draw a better NAFTA deal, with SeSoul coming under stronger pressure to make concessions in some contentious issues, including the auto sector.
South Korea sold 3.6 million tons of steel products to the US last year, making it the No. 3 steel exporter following Canada and Brazil, according to the Department of Commerce.
Despite the military and economic alliance with the US, South Korea is in a more difficult situation than other nations due to its high volume of steel imports from China, which is blamed for flooding the global market with cheap products.
South Korean officials say they will make it clear that the country has been reducing its steel production to address the global supply glut and is not serving as a backdoor for Chinese steel to reach US markets.
South Korea has reduced imports of Chinese steel. Of the steel exported to the US, Chinese products accounted for a mere 2.4 percent in 2016, the ministry said. Korean steel exports to the US also dropped by 32 percent in 2017 compared with 2014, with its market share sliding to 3.4 percent.
Although the two sides agreed to draw a quick fix for the six-year free trade deal, the situation for Seoul is more complicated as maintaining and building on the strong ties with Washington is critical as it prepares for talks with North Korea in the coming months.
Trump hasn't softened his harsh rhetoric against the FTA even amid a flurry of diplomacy to bring North Korean leader Kim Jong-un to the negotiating table for denuclearizaton talks, raising concerns that US could link security with trade talks.
Reflecting this as the two sides engaged in the latest round of trade talks, Trump asked South Korean officials to show flexibility in trade negotiations during a phone conversation with President Moon Jae-in, in which the two sides discussed preparations for talks with North Korea, the Blue House said Friday.
Trump has denounced the pact as a "very bad deal" that cost American jobs and increased trade deficits in the manufacturing sector, though the US has benefited in the areas of agriculture and services.
The US is South Korea's second-largest trading partner after China, with bilateral trade reaching $119.3 billion in 2017, according to government data.
South Korea's trade surplus with the US fell from $25.8 billion in 2015 to $17.8 billion last year on sluggish sales of autos and steel, and as the country imported more American beef and natural gas. (Yonhap)