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The Diplomat
03-07-2025
- Business
- The Diplomat
Why South Korea Needs a Trade Deal With the United States
Without a new deal or an extension to the talks, South Korea will face a series of new tariffs from the United States that will significantly impact its economy. With the South Korea-U.S. free trade agreement (KORUS FTA) in place, there are virtually no tariffs on trade between the two countries – and there should be no need for a new trade deal. The Trump administration, however, believes that U.S. trade partners have treated the United States unfairly and that new trading arrangements are necessary. Reaching a deal with the Trump administration is complicated by the significant uncertainty the administration has created with its series of tariffs and a shifting approach to negotiations. However, despite these challenges and being in office less than a month, the new Lee Jae-myung administration needs to secure a new trade deal or extension with the United States by July 8 negotiating deadline. Without a new deal or an extension to the talks, South Korea will face a series of new tariffs from the United States that will significantly impact its economy. As one of the world's leading trading nations, South Korea is both directly and indirectly impacted by the new tariffs being implemented by the Trump administration. In the aftermath of the Korean War, the country rebuilt its economy and became one of the world's economic development success stories in part because of international trade. Even today, trade is a key component of the Korean economy. In 2024, exports and imports accounted for 77.6 percent of South Korea's GDP. Exports alone were equivalent to 39.1 percent of GDP. While China remains South Korea's largest trading partner, the margin has been decreasing in recent years. The United States is South Korea's second-largest trading partner and a critical partner for technological cooperation and economic growth. Last year, South Korea exported $128.4 billion in goods to the United States, according to United Nations trade data, only about $4 billion less than it exported to China. Because of the global nature of supply chains, even tariffs that do not directly target South Korea can impact the supply chains of Korean companies either through parts that are produced in third countries for final assembly in the United States or finished goods that are built in third countries for export to the U.S. market. In this context, Korean firms face the impact of the full array of the Trump administration's tariffs including the reciprocal tariffs, sectoral tariffs on steel, automobiles, semiconductors, and other products, as well as tariffs on China and potentially Canada and Mexico. How the Reciprocal Tariffs Impact South Korea In the April 2 executive order announcing the so-called reciprocal tariffs, the White House argued that 'Large and persistent annual U.S. goods trade deficits are caused in substantial part by a lack of reciprocity in our bilateral trade relationships.' In the case of South Korea, the United States has maintained a persistent trade deficit that reached $55.9 billion in 2024. The trade deficit has grown significantly since the implementation of the KORUS FTA and was a point of contention during the first Trump administration. In announcing the reciprocal tariffs, the Trump administration placed a tariff of 25 percent on imports from South Korea. Automobiles, steel, and other products are subject to subject to separate Section 232 national security tariffs; the reciprocal tariffs impact all other trade. They include two parts – a 10 percent universal tariff and a set of country-specific reciprocal tariffs (in South Korea's case, set at 25 percent). While the reciprocal tariff portion is theoretically open to negotiation, under a 90-day 'pause' that expires next week, the universal tariff may be a new baseline under the Trump administration. For the moment, many electronics products such as smartphones and computers will be exempted from the reciprocal tariffs, but those are expected to be covered to some extent by new tariffs once an ongoing Section 232 investigation into semiconductors is finished. According to a study by the Korea International Trade Association, around 50 percent of all Korean exports to the United States are intermediate goods used in production in the United States. These include semiconductors, auto parts, and steel. The high level of Korean exports of intermediate goods to the United States limits the impact of the reciprocal tariffs on South Korea to an extent but also means that the country is more exposed to the sectoral tariffs. When combined with automobile exports, this means that a significant portion of Korean exports will be hit by Section 232 tariffs. However, some significant exports will be subject to the reciprocal tariffs. These include $5.5 billion in exports of petrochemical products, $4.5 billion in plastics, $2.4 billion in optical and related equipment, and nearly $2 billion each in organic chemicals and cosmetics. To give one specific example, global exports of K-beauty products last year surpassed $10 billion for the first time. The United States is the second largest market for K-beauty products. If the full 25 percent tariff remains in place, exports of K-beauty products would likely see a decrease in demand in the United States and producers may need to grow alternative markets such as China and Japan, the number 1 and 3 export destinations for K-beauty. Tariffs on the Automobile Industry Automotive tariffs are the most significant challenge. Exports of automobiles and automotive parts accounted for a third of Korean exports to the United States in 2024. The U.S. is the most important market for the Hyundai Motor Group. Last year, the conglomerate sold 4.1 million vehicles globally; more than 1.6 million of those sales were in the United States, with Hyundai selling 836,802 vehicles and Kia an additional 796,488 vehicles. While the new Metaplant America facility in Georgia will help with U.S. production, slightly more than 50 percent of all vehicles sold by Hyundai Motor Group in the United States are imported. Hyundai Motor Group is not the only automotive producer impacted by the tariffs. GM Korea produces around 500,000 vehicles annually in plants in South Korea, with 90 percent of the production exported to the United States. GM estimates that the tariffs on its Korean production could reduce its overall profit by $2 billion. Without tariff relief, there are concerns in South Korea that the increased costs faced by GM Korea will further a reduction of GM Korea's operations that has been taking place over the last decade. The complete closure of GM Korea is not out of the question. Beyond the impact on Hyundai Motor Group and GM Korea's sales and profits, there will likely be an impact on employment in South Korea, where the automotive industry employs around 335,600 people. If GM Korea were to shutter its facilities completely, it would result in approximately 12,000 job losses. Without an agreement to reduce the Section 232 auto tariffs, imports of Korean autos and auto parts will continue to face a 25 percent tariff – separate from the reciprocal tariffs. The tariff on auto parts was adjusted to provide some relief for parts used to assemble vehicles in the United States, and the steel tariffs will also not apply for imports of steel used in automotive production. Other Section 232 Tariffs: Steel, Semiconductors, and Pharmaceuticals Ordinarily, being subjected to a 50 percent tariff would not be a positive outcome. However, the Trump administration's decision to initially place a 25 percent tariff on all steel imports, later raised to 50 percent, and cancel prior quota agreements on steel did have one silver lining – it eliminated the quota that had been limiting Korean exports to the United States since the first Trump administration. That may be the only positive for South Korea on the steel tariffs. The significant increase in the U.S. tariff on steel comes at an inopportune time for Korean producers. The United States is only the fourth largest export market for Korean steel, but South Korea's domestic steel producers are under pressure from a global glut of steel production, cheap Chinese products, and now the U.S. tariffs. This has forced Korean steel producers to suspend some production and close some facilities. Because the U.S. tariff will not just apply to exports of steel to the United States, but also steel used in large consumer goods such as refrigerators, washers, and dryers, the tariffs are also creating a pressure for exporters of large consumer goods to shift away from Korean steel in production. One estimate by Allianz Research suggests that the tariffs could result in a $600 million loss for Korean steel exports to the United States. Efforts to conclude a deal with the United States are further complicated by additional Section 232 national security cases that the administration is undertaking in areas such as semiconductors and pharmaceuticals. Last year, South Korea exported $10.7 billion worth of semiconductors to the United States. Samsung and SK Hynix account for around 70 percent of global production of DRAM memory chips and are the top two producers of NAND flash memory. The industry is critical to the Korean economy. The $10.7 billion in exports to the United States, however, understates the potential impact of a new semiconductor tariff on South Korea. Both Samsung and SK Hynix have significant production in China, from which they exported an additional $1 billion to the United States. Pharmaceuticals are another area that will be potentially impacted by a Section 232 investigation. South Korea had seen the industry as a potential area of growth and exported $1.4 billion worth of pharmaceuticals to the United States in 2024. Tariffs on Supply Chains in Vietnam, China, and Mexico Because of the nature of global supply chains Korean firms will also face tariffs on goods produced by suppliers or their own firms in other countries. Samsung, for example, produces 60 percent of its smartphones in Vietnam, many of which are then shipped to the United States. Trump announced that Vietnam has agreed to a 20 percent tariff rate; if that eventually includes consumer electronics, Samsung smartphones would face a 20 percent tariff when shipped from Vietnam rather than the current 0 percent tariff. If the White House maintains an exclusion for consumer electronics but places a tariff on the semiconductors inside the smartphone, the origin of the semiconductor will impact the tariff unless South Korea can gain an exemption for any semiconductor produced by a Korean firm regardless of the production facilities' location. The potential semiconductor tariff also could impact production in other ways. Both Samsung and SK Hynix have significant production in China that provides chips to U.S. and foreign firms that assemble consumer electronics in China for export to the United States. Both firms could face pressure to relocate that production as the partners they supply look for ways to avoid tariffs on their final goods. In the automotive sector, the long-term status of the United States-Mexico-Canada Agreement (USMCA) will also be significant. The Trump administration has for the moment suspended tariffs on goods from Canada and Mexico that are compliant with USMCA rules. If that exemption is changed, Korean firms could face tariffs on goods produced in Mexico or Canada for the U.S. market. Korean firms exported 271,000 vehicles from Mexico to the U.S. in 2024, such as the Kia Forte, which is exclusively made in Mexico for the U.S. market. Under normal circumstances, South Korea would be well placed to compete in the U.S. market with the KORUS FTA in place. However, with the Trump administration utilizing national security exemptions to override that agreement, South Korea will need to reach a new understanding on trade to minimize the damage to key sectors such as automobiles and semiconductors. Due to the global nature of supply chains, South Korea will be unable to completely avoid all the new U.S. tariffs, but a new deal that avoids tariffs to the extent possible on goods produced in South Korea is necessary.
Yahoo
11-04-2025
- Business
- Yahoo
White House says it's working on new trade deals, but it's hiding the countries' names
In Donald Trump's first term, the president and his team successfully completed two trade deals. The first was a deal with South Korea, which tweaked the existing KORUS agreement, and the second was the USMCA agreement with Canada and Mexico, which tweaked the existing NAFTA agreement. In both instances, however, the process was quite public: Trump wanted everyone to know what he was doing and with whom. There were private negotiations, of course, but no one saw a need to keep the existence of the talks under wraps. On the contrary, the White House was eager to alert the public to the fact that the talks were happening. In the Republican's second term, things are ... different. The New York Times summarized matters this way: A day after President Trump capitulated on his global reciprocal tariffs, he and Commerce Secretary Howard Lutnick insisted that one country after another was coming to them to make deals to avoid further economic pain. But the devil is in the details, and Mr. Trump and Mr. Lutnick offered very few. Instead, they said that things would work out, without saying much more. As this week got underway, and much of the planet focused on the White House's trade tariffs, the president published an item to his social media platform that said 'more than 50' countries had contacted the administration about negotiating new trade deals. A few hours later, Trump revised the total, touting that it was 'almost 70' countries that had reached out. On Wednesday, when the Republican announced a 90-day 'pause' for much of his tariffs agenda, he wrote that his decision was driven by the fact that 'more than 75' countries that wanted to open negotiations with the administration. The White House press office soon after said it would not disclose the names of the 75 countries. It also wouldn't say why the list had to be kept secret. Kevin Hassett, the director of the White House National Economic Council, tried to clarify matters a day later, telling CNBC that the total number of countries is more than 75, but only about 15 of them had presented the administration with 'explicit offers.' Hassett, a Trump trade adviser, made similar comments on Fox News. But asked to list the trade partners, Hassett stuck to a familiar line. 'I'm not going to name the countries yet,' he said. It's possible that the White House has legitimate diplomatic reasons to keep the details secret. But it's also difficult to give Trump and his team the benefit of the doubt. This is, after all, a president who has repeatedly referenced conversations that did not occur in reality. Complicating matters further, with a 90-day pause in place, it's far from clear how the White House intends to strike multiple bilateral deals simultaneously over the course of a few months. Given all of this, and Team Trump's odd refusal to offer relevant details, the administration's assurances should probably be taken with several grains of salt. This article was originally published on
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Korea Herald
27-03-2025
- Business
- Korea Herald
[Herald Interview] Trump unlikely to revisit FTA, but tariffs may hit Korea harder: strategist
Ex-US diplomat outlines strategic dos and don'ts for Seoul in navigating Trump 2.0 US President Donald Trump's tariffs on specific industry sectors will be more consequential for South Korea than his looming "reciprocal" levies, with core industries like automobiles, semiconductors and steel — pillars of the country's export-driven economy — squarely in the crosshairs, former US veteran diplomat Kurt Tong told The Korea Herald in Seoul. Tong, managing partner at The Asia Group, a Washington-based strategic advisory firm, urged Seoul to adopt a calibrated response — whether through retaliation, selective acceptance, or constructive incentives such as investment pledges — depending on the extent and justification of tariffs, imposed outside the protections afforded by the Korea-US Free Trade Agreement. Tong, however, saw only a slim chance of the Trump administration pursuing a renegotiation of the KORUS due to political and procedural burdens, particularly with a sharply divided US Congress, despite growing concerns in Seoul. Trump's trade blitz, with its two main axes of sectoral and reciprocal tariffs, has put South Korea on alert. The country is scrambling to stay off a looming list of reciprocal tariffs, which are designed to mirror duties and barriers faced by US exports. The list is set to be unveiled on April 2 — a date Trump has labeled as 'Liberation Day." "I actually think that for Korea, the sectoral tariffs are going to be more important than the reciprocal tariffs," Tong told The Korea Herald on March 21. "Among the nations of the world, Korea has — if you think about the sectoral tariffs that have been proposed on automobiles, steel and aluminum, semiconductors, and pharmaceuticals — Korea is a major exporter of three of those four items." The US accounted for 50.8 percent of Korea's $68.3 billion of auto exports, up from 47.1 percent a year earlier. Semiconductor exports contributed $141.9 billion to overall exports, with the US portion remaining at around 7.2 percent. The US also took in 21 percent of Korea's steel exports, or around $4.7 billion, and was the fourth-largest destination, according to the Korea International Trade Association. Ahead of the rollout of a range of reciprocal tariffs, Trump on Wednesday announced a plan to levy a 25 percent tariff on all imported automobiles — yet another key axis in his wide-ranging tariff push centered on sector-specific measures. The move follows through on his February pledge to tax big industries, including autos, semiconductors and pharmaceuticals, "in the neighborhood of 25 percent." A 25 percent tariff on steel and aluminum is set to take effect on March 12. 'The tariff rates that are being discussed are very high, significantly high rates," Tong underscored. Tong said South Korea must formulate its strategy based on how sectoral and reciprocal tariffs are calculated — and whether the tariff figures proposed by the US are reasonable or excessive. "So, Korea also needs to have a strategy for those tariffs, whether it involves retaliation, whether it involves acceptance, whether it involves positive leverage response," Tong said. "By positive leverage response, for example, the Korean government, Korean industry could work together to make promises about more investment in the United States." Hyundai Motor Group on Monday announced a plan for $21 billion in new investments in the US through 2028 — marking its largest overseas investment — at the White House, drawing Trump's praise. FTA expected to stay intact However, Tong saw little chance of the Trump administration seeking to amend the KORUS FTA, despite rising concerns in Seoul. The agreement already went through changes in Trump's first term to incorporate US demands, including limiting Korean steel exports, relaxing US auto import requirements, and a 20-year extension of US tariffs on Korean trucks, as well as Korean demands. 'I actually would be surprised if the Trump administration decides to put more energy into an FTA revision or a new FTA, because they're skeptical about FTAs and the president, politically, wants fast and big victories,' Tong said. 'The FTA approach takes a long time — it's very complicated. The public doesn't understand what's happening. The president then would have to — if it's a real FTA — get cooperation from Congress, which is complicated and difficult.' With Republicans maintaining their slim 53–47 Senate majority and only a five-seat House edge — one of the thinnest margins in modern history — deep partisan fault lines have brought Congress to a standstill, making complex trade negotiations politically fraught and unlikely to move. 'The US Congress is very skeptical on trade — but it's mostly skeptical about passing anything, any legislation, because of the sharp political divide between Republicans and Democrats,' Tong said. 'So I think it's going to be more of a sector-by-sector type negotiation than an FTA negotiation.' 'Dos and don'ts' for Seoul When asked what South Korea can do to successfully navigate challenges during the second Trump administration, Tong discussed "the dos and don'ts of the relationship," proposing a list of strategies for Seoul. 'On the 'do' side, it's about dealing with the reality of the Trump administration. The good things to do are to be positive in setting the agenda, play to your strengths, emphasize those strengths, be direct and clear in communication — without being excessively confrontational — and seek to communicate directly with President Trump," Tong said. 'The don'ts are to assume that Trump and his team understand everything, to reference prior agreements as if those can't be changed, or to be quiet or passive and ask for forgiveness or to be spared.' Instead of approaching negotiations defensively, Tong said, Korea should present itself as a partner with leverage: 'Going into the Trump conversation with 'Please don't hit me, I'm scared' means you're going to get hit harder. Go in with: 'You shouldn't hit me because you want something from me. Here are some possibilities, let's talk about it — person-to-person, man-to-man negotiation style.'' Tong characterized the two sides' discussion as "more like a bottom-up, zero-based conversation," though he noted a hopeful prospect was in sight. "I think the end result will be the relationship being fine and solid — because it's to the mutual benefit of the United States and Korea to have a strong relationship, to have a deep economic relationship — but that it has to be kind of explained from the beginning, not in a university lecturer kind of style, but rather in a negotiating style," Tong said. "Trump's going to bring a lot of leverage to the relationship. Korea can also bring leverage — both positive leverage and negative leverage — to the conversation, and then frame it in a way that is like a negotiation, but also touches on the fundamentals." Will Trump attend APEC? The Asia-Pacific Economic Cooperation summit, which South Korea is set to host from late October to early November this year, will serve as one of the key platforms where Trump can foster economic and business ties with Korea, and meet with leaders in the Indo-Pacific region, including Chinese leader Xi Jinping. "I don't expect the US to use APEC for any big policy moves. But still, APEC could be useful to the US. The US could be interested in it for specific topics, like if there's a good discussion on AI and AI rules at APEC, the US will participate,' Tong said. 'I don't think President Trump is personally interested in that. He's more of a big-picture approach.' Tong said his "best guess" would be that Trump will attend for mainly two reasons despite his bilateral and transactional style of trade, which is contrary to the core mission of APEC for free and open trade in the Indo-Pacific region. 'One is because Korea is an important country, and it could be part of his strategy for negotiating with Korea to build a stronger economic relationship that fits more with the America First approach — and that's attractive to the president,' Tong said. 'And the other is, it's a venue for conducting the China negotiations — because China is an active member in APEC, and President Xi is almost certainly going to come because China is hosting APEC in 2026.' Tong further explained that Trump's participation in APEC could be influenced by Russian President Vladimir Putin's potential participation, which is currently prohibited, and by North Korea's actions, which aim to raise the country's priority in US foreign policy. 'If Trump's strategy for a ceasefire and armistice in Ukraine is successful — I don't know whether it will be, as I think it's proving more difficult than he expected — but if it is successful, then maybe he could meet Vladimir Putin at APEC as well,' Tong said. 'So, there's also a North Korea policy angle to visiting South Korea. I don't think that's a high priority for the United States, but North Korea might try and make it a priority by misbehaving sometime this year. We'll see what their strategy is, whether they want to poke their head up and start messing around again or not. So, I expect he'll come, and a lot of these themes will be happening.' On North Korea, Tong made clear that renewed summit diplomacy is unlikely under a second Trump administration — unless Pyongyang takes the initiative. 'Right now I see no signs of the US proactively reaching out to North Korea and making them a high priority,' he said, adding that Trump's door to communication remains technically open — 'he might send them a letter.' Tong emphasized that Trump's past efforts to strike a "grand bargain" with North Korean leader Kim Jong-un failed because Kim was unwilling to fully abandon his nuclear program in return for a promising future, including economic growth and diplomatic recognition, and given Kim's continued stance, Trump is unlikely to pursue negotiations again. "He (Trump) is not going to put a lot of energy into it. I think if there's going to be a Trump-Kim dance, Kim's going to have to make the first move,' Tong said. "It does take two to dance, but somebody's got to ask the other one out, and I don't think it's going to be Trump."
Korea Herald
21-03-2025
- Business
- Korea Herald
US industry group calls on USTR to urge S. Korea retract online platform regulation proposals
An American industry group has asked the United States Trade Representative to urge South Korea to withdraw its digital platform regulatory proposals, stressing they pose an "unnecessary irritant" to the two countries' relationship and could breach a bilateral free trade agreement. The Coalition of Services Industries submitted the comments to the USTR last week to assist in the review and identification of "unfair trade practices and harm from non-reciprocal trade arrangements." The USTR is likely to examine the case for its calculation of "reciprocal" tariffs for Korea set to be rolled out on April 2. In late 2023, the Korea Fair Trade Commission proposed enacting an act aimed at tightening oversight over market-dominant online platform businesses to ensure fair competition. After pushback from US stakeholders and others, it announced a new proposal in September to revise the country's existing key anti-trust law instead of seeking new legislation. "Concerningly, the new proposal still retains problematic elements from the ex-ante proposal, such as disproportionately targeting US companies and narrowly focusing on online services that US firms provide in Korea," the coalition said. It pointed out that other bills for digital platform regulation are also under consideration at South Korea's National Assembly. "Korea's pursuit of discriminatory legislation against US firms is an unnecessary irritant to the longstanding bilateral relationship and a potential KORUS violation that creates an unlevel playing field for US firms competing against rapidly growing Chinese e-commerce companies," it said. KORUS is short for the South Korea-US free trade agreement. "CSI asks USTR to urge the Korean government to withdraw both ex-ante and ex-post proposals that would significantly disadvantage US firms," it said. During a confirmation hearing in February, then USTR nominee Jamieson Greer warned South Korea and other countries against taking regulatory measures that would negatively affect American online technology firms, saying that "it won't be tolerated." The coalition lashed out at the KFTC, accusing it of unfairly treating US firms. "The KFTC continues to unfairly target US companies with unprecedented fines, office raids, threats of prosecution, and attempts to harass American companies with criminal allegations and erroneous investigations," it said. "This enforcement culture in Korea is a troubling anomaly for a closely allied US trading partner and could represent 'unfair or harmful acts, policies, or practices' that present a 'structural impediment to fair competition' per the Trump administration's recent Reciprocal Trade Memo." It was referring to the presidential memorandum that President Donald Trump signed last month to devise a comprehensive plan to customize "reciprocal" tariffs based on trading partners' duties, non-tariff barriers, exchange rate policies and other elements. The coalition also took issue with South Korea's telecommunications business act, which it depicted as a legal basis for allowing Korean telecommunications providers to charge online platforms for utilizing the online network. It particularly pointed to provisions, such as a regulatory requirement to designate a domestic representative, which it said "not only add unnecessary friction to trade, but also have potential implications for taxation and are inconsistent with Korea's obligations under the Korea-US FTA." It went on to underscore additional regulatory proposals in South Korea that require content and application providers to enter into a network use agreement with Korean internet service providers, or additionally mandate CAPs to pay "network usage fees" to Korean ISPs under the agreement. "Failure to comply would result in the issuance of a correction order or a penalty surcharge," it said. "These proposals would restrict the ability of US content and applications service providers to access the Korean telecommunications network on reasonable and nondiscriminatory terms and conditions, calling into question Korea's adherence to its KORUS commitments." Moreover, the coalition highlighted South Korea's restrictions on the export of location-based data, which it claimed have led to a competitive disadvantage for international suppliers seeking to incorporate such data into services offered from outside of Korea. "Foreign-based suppliers of interactive services incorporating location-based functions, such as traffic updates and navigation directions, cannot fully compete against their Korean rivals because locally based competitors typically are not dependent on foreign data processing centers and do not need to export location-based data," it said. "Korea is the only significant market in the world that maintains such restrictions on the export of location-based data." It noted that exporting geospatial data requires a license in Korea, arguing that Seoul has never approved a license to export cartographic or other location-based data, despite numerous applications by foreign suppliers. "US stakeholders have reported that Korean officials, citing security concerns, are linking such approval to a separate issue: a requirement to blur certain integrated satellite imagery of Korea, which is readily viewable on other global mapping sites based outside of Korea," it said. "Korean officials have expressed an interest in limiting the global availability of high-resolution commercial satellite imagery of Korea but have no ready means of enforcing such a policy since most imagery is produced and distributed from outside of Korea." The comments came as the Trump administration plans to impose country-by-country reciprocal tariffs that will be customized based on US trading partners' tariff- and non-tariff barriers, and other factors, such as exchange rates and unfair trade practices. (Yonhap)
Korea Herald
21-03-2025
- Business
- Korea Herald
US industry group asks USTR to help reduce or eliminate S. Korea's 'screen quota' system
A US industry group has called for South Korea to lower or remove the Asian country's "screen quota" system that mandates theaters fill part of their screening time with domestic firms, in comments made to the United States Trade Representative. The Coalition of Services Industries submitted the comments to the USTR last week to assist in the review and identification of "unfair trade practices and harm from non-reciprocal trade arrangements." The USTR is likely to examine the case for its calculation of "reciprocal" tariffs for Korea, set to be rolled out April 2. "In 2006, prior to the KORUS FTA negotiations, the Korean government agreed to reduce its screen quota requiring exhibition of Korean films to 73 days per year," the coalition said in the comments viewed by Yonhap News Agency. KORUS FTA is short for the South Korea-US free trade agreement. "Over 16 years later, amidst rapid development of its cultural industries and the success of many Korean films and television productions internationally, now is the time for Korea to show leadership in the region, trust the choices of its consumers and further reduce or eliminate its screen quota," it added. South Korea's screen quota system was initiated decades ago to protect local films from big-budget Hollywood flicks. The 73-day quota was fixed in 2006, down from the previous 146 days. The coalition also took issue with Korea's small de minimis duty exemption for imports from the US. "Korea only applies the $200 de minimis mentioned above to imports from the US and has not implemented it globally on a most-favored nation basis. This has undermined the main benefit of a higher de minimis level, namely a streamlined process for rapid border clearance of these goods," it said. "Conversely, Korea's interpretation has added to the complicated web of regulatory restrictions that inhibit trade facilitation while requiring the dedication of more automated resources to distinguish shipment values for separate customs procedures according to origin." The comments came as US President Donald Trump's administration plans to impose country-by-country reciprocal tariffs that will be customized based on US trading partners' tariff and non-tariff barriers, and other factors, such as exchange rates and unfair trade practices. (Yonhap)
