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First negotiation to amend KORUS FTA held Friday

Posted January. 08, 2018 08:41,   

Updated January. 08, 2018 09:28


During the first negotiation to amend the South Korea–U.S. FTA, the United States concentrated on the trade deficit in the car industry between the two nations. South Korea requested the improvement of the Investment State Dispute (ISD) and an alleviation of the United States’ protectionism.

The two nations had their first round of negotiation to amend the FTA in Washington, D.C. on Friday (local time). It has been three months since they agreed to carry out the amendment of the trade agreement in October 2017 during the special session of the Joint Committee under the KORUS FTA. 

The United States’ main focus was on automobiles during Friday’s negotiation, which lasted for about nine hours. “The issue the United States intensely focused on was automobiles,” said Yoo Myung-hee, a director general for FTA Negotiations from South Korea, after the first negotiation.

Since December last year, the South Korean government has been preparing for the U.S.’s attack on the car industry by reporting at the National Assembly that the United States is likely to target the car industry. Automobiles and its components are main export products of South Korea, which takes first and second place in its exports to the United States. U.S. President Donald Trump, who once called the KOR-US FTA a disaster, is seeking a boom in the car industry that has its roots in the “Rust Belt,” which is a weakened industrial zone and Mr. Trump’s support base.

American automobiles have failed to gain popularity in the Korean car market. According to the Korea Automobile Importers and Distributors Association on Sunday, the market share of American automobiles such as Ford, Cadillac and Chrysler remains at a mere 8.6 percent. This is not so different from 7.4 percent of 2012 when the KORUS FTA first went into effect. The United States has been making demands to raise the 25,000-unit threshold for American car shipments to South Korea that enter the country without fulfilling domestic regulations if they meet its safety standards or even abolish it. In the meanwhile, South Korea has been emphasizing that the tariffs for automobiles have been abolished completely and the sales of American cars have increased by two folds in five years as a result of signing the FTA.

The agriculture industry, which Korea claimed to be a “red line,” was not handled in-depth at the first round of negotiation. Nonetheless, there is a possibility that the United States may keep in mind how sensitive Korea is regarding the agriculture industry and request opening major markets such as automobile and steel industry, which has large trade volumes and create jobs in the United States, in return for giving way to the agricultural industry.

“It is not easy,” said Yoo, who was careful about the future of the negotiation. U.S. Trade Representative Robert Lighthizer said that there are lots of works. The interests of the two sides appear to be in sharp conflict. The second round of negotiation will be held as early as sometime this month in Seoul.

Gun-Huk Lee gun@donga.com