US, South Korea agree to revise six-year-old trade pact

WASHINGTON: The US and South Korea agreed to revise their six-year-old trade pact with a side deal to deter competitive currency devaluation by Seoul and with concessions for US auto and pharmaceutical companies, Trump administration officials said yesterday.

They told reporters that the deal includes provisions outlined by South Korean officials, including a 20-year extension of the 25 per cent US tariff on pickup trucks and a doubling of the Korean import cap on vehicles that meet US-specifications to 50,000 per manufacturer per year.

The agreement, cobbled together quickly with only a few rounds of negotiations under Mr Donald Trump's threat of withdrawal, will include a side-letter that requires South Korea to provide increased transparency of its foreign exchange interventions, with commitments to avoid won devaluations for competitive purposes.

The currency deal, final details of which are still being negotiated between the US and South Korea, is considered a "side letter" that will not be enforceable with trade sanctions.

The revised US-South Korean Free Trade Agreement, known as Korus, would be the first US trade deal in force with a currency side-deal, and would not need congressional approval, the officials said.

The officials confirmed that South Korea agreed to cut its steel exports to the US by about 30 per cent in exchange for the rest being excluded from steel tariffs.

Korean aluminium producers would still be subject to US President Donald Trump's 10 per cent tariff on aluminium.

Other countries also must agree to similar quotas to escape tariffs, but the size of the limits would vary. The US is negotiating with Canada, Mexico, Brazil, the European Union, Australia and Argentina. - REUTERS