The U.S. formally announced its agreement in principle on a revised trade pact with South Korea on March 28, one that American trade officials say will increase the export market for U.S. automakers and reduce a more than $20 billion trade deficit.
U.S. Trade Representative Robert Lighthizer outlined several key amendments to the United States-Korea Free Trade Agreement, or KORUS, including one in which the U.S. will extend its 25% tariff on imports of Korean pickup trucks by 20 years through 2041.
The amended trade agreement will double the number of automobiles that individual U.S. automakers can export annually under American safety standards to 50,000 from 25,000.
South Korea will also recognize U.S. standards for auto parts needed to service U.S. vehicles, which Lighthizer said will reduce labeling burdens.
In addition, the updated agreement will align U.S. and Korean auto testing requirements to eliminate duplicate testing, a move intended to improve what the trade representative's office called "onerous and costly" verification procedures on the origin of exports.
"The United States and Korea have strengthened an important economic relationship by agreeing to substantial improvements to KORUS that will help rebalance our trade, reduce our trade deficit, and expand U.S. export opportunities," Lighthizer said in a news release.
In a separate joint statement, Lighthizer and Republic of Korea Minister for Trade Hyun Chong Kim said the two countries are finalizing the terms, which are subject to U.S. and South Korean domestic review procedures.
U.S. tariff amendments will undergo consultation and layover procedures, including a 60-day congressional consultation period.
Several senior administration officials told reporters March 27 that the two countries reached an agreement in principle on a revised KORUS, marking the administration's first successful renegotiation of an existing trade pact.
As part of the deal struck in renegotiating the trade pact, the U.S. has also agreed to exempt South Korea from President Donald Trump's 25% tariff on U.S. steel imports. However, Korean imports of steel into the U.S. will be subject to a product-specific quota equivalent to 70% of the average annual import volume between 2015 and 2017.
That provision, which the U.S. says will result in a "significant" reduction of Korean steel exports to the U.S., is slated to take effect May 1.
According to the latest figures from the trade representative's office, the U.S. goods deficit with South Korea was $22.9 billion in 2017, a 73% increase from $13.2 billion when the trade pact first went into effect in March 2012.
U.S. and South Korean trade officials met twice in January to begin a formal renegotiation of KORUS.