South Korea looks to narrow trade deal gaps with US, seeks common ground

SEOUL: South Korea’s top trade negotiator Yeo Han-koo is in the United States this week seeking to finalise a trade deal to lower tariffs agreed upon in late July.

Differences over the deal’s implementation — particularly concerns about the foreign exchange impact of a US$350 billion investment fund — have so far prevented the two sides from reaching a final agreement.

On Sunday (Sep 14), South Korea’s finance ministry said it was in discussions with Washington on measures to limit the investment package’s effect on the onshore currency market but declined to confirm if these included a foreign exchange swap line, according to Reuters. 

Yeo’s visit to Washington follows Industry Minister Kim Jung-kwan’s recent trip there, where he held talks with US Secretary of Commerce Howard Lutnick. 

South Korean media have said the lack of progress in the trade talks has fueled concerns of an impasse.

AUTO TARIFFS

Seoul is also pushing for reductions in US auto tariffs, similar to those secured by Japan.

South Korea's largest carmaker Hyundai Motor, for instance, faces mounting pressure as tariffs on Japanese exports to the US were reduced to 15 per cent from Tuesday. 

This is lower than the 25 per cent imposed on South Korea's vehicles, which puts their automakers at a disadvantage.

Hyundai has already flagged that tariff costs would weigh more heavily on its third and fourth quarter earnings.

The issue of levies and the recent immigration raid on a Hyundai facility in the US earlier this month were raised in South Korea’s parliament on Tuesday amid concerns about the broader economic fallout.

South Korean Foreign Minister Cho Hyun told lawmakers that the government was trying to ease carmakers’ burden by finding a win-win outcome with the US.

But he stressed that Seoul would not rush the trade talks, because it wants to protect its national interests and maintain a strong South Korea-US relationship.

He noted that South Korea could not sign a trade deal with the US when their leaders met last month in Washington because the demands were not acceptable.

“At that time, the package was something we could not accept, so not putting it into writing was actually the way to protect our national interests,” said Cho. 

“Since the details still had to be worked out, continuing talks was the best way to safeguard our interests. That’s why things turned out that way.”

MENDING FRAYED TIES

The tariff talks come as both Seoul and Washington attempt to mend strained ties. 

Tensions escalated after a recent US immigration raid in Georgia, where more than 300 South Korean workers were arrested at a battery plant — one of South Korea’s largest US investment projects by Hyundai and LG.

South Korea's foreign ministry said it would conduct a more thorough review with the companies to determine whether any human rights violations occurred during the raid.

Meanwhile, anger over the raid continues to simmer in Seoul, with protest rallies planned for later this week.

Over the past weekend, hundreds of demonstrators gathered outside the US embassy, warning that they would boycott American goods if Washington continues to threaten South Korean interests.