UPDATE : 2018.8.14 TUE 14:06
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S. Korea complains about strict U.S. tariffs during 2nd FTA talk with U.S.

South Korea expressed strong concerns over trade remedies on its goods during the second round of talks to amend the free trade agreement (FTA) with the United States, while the U.S. side sought ways to reduce the trade deficit in the auto sector, Seoul's trade minister said Thursday.

Yoo Myung-hee, the deputy minister for FTA negotiations at the Ministry of Trade, Industry and Energy, held a two-day meeting in Seoul with Assistant U.S. Trade Representative (USTR) Michael Beeman, in Seoul to rewrite terms for the five-year-old deal.

The meeting came at a sensitive time, as U.S. President Donald Trump last week signed steep safeguard tariffs on washers and solar panels, including those from South Korea.

"We expressed strong regret over safeguard actions on solar cells and washers (by the U.S. government)," South Korean Trade Minister Kim Hyun-chong told reporters after the meeting. "We also pointed out the unfairness of using adverse facts available when slapping high anti-dumping tariffs (on Korean goods)."

The "adverse facts available" provision allows for the levying of extremely high anti-dumping and countervailing duties if an accused company doesn't hand in data demanded by the U.S.

South Korean Trade Minister Kim Hyun-chong answers questions from reporters after the second round of the talks to revise the free trade agreement with the United States, held in Seoul on Feb. 1, 2018. (Yonhap)

Under the safeguard measures, a 20 percent tariff will apply on the first 1.2 million washers imported in the first year and a 50 percent tariff on machines beyond that number. A 30 percent tariff will be imposed in the first year on imported solar cells and modules above 2.5 gigawatts.

The Seoul government is seeking consultations with Washington over the heavy duties, which are set to take effect Feb. 7.

Unless the matter is settled through the bilateral consultations, South Korea's trade ministry said earlier it will file a suit with the World Trade Organization (WTO) seeking compensation for damages suffered by Korean companies.

"As this is the second round of negotiations, we have to talk more to understand each other's stance," Kim said. "A long road lies ahead."

Seoul is seeking to revise the investor-state dispute settlement (ISDS) clause and explore ways to protect the agriculture industry, which has suffered since the implementation of the FTA.

With the ISDS provision, investors can sue countries for alleged discriminatory practices through international arbitration bodies. Local experts have expressed concerns that large multinational companies could exploit the clause, leading to the infringement of South Korea's judicial sovereignty.

"We are trying to prevent abuse of the ISDS process, which was also mentioned in past negotiations in the service sector," said Kim, who served the WTO's appellate body.

The U.S. side continued to make demands regarding the auto industry, which is also a thorny issue for the U.S. in ongoing North American Free Trade Agreement talks.

"The U.S. side is very interested in the auto sector, as most of U.S. trade deficits (with South Korea) are from the sector," Kim said, without elaborating on details of the discussions.

While the bilateral trade deal has boosted auto trade between the two nations, South Korean companies have enjoyed greater benefits thanks to the bigger size of the U.S. auto market, which is about 10 times that of the domestic market.

South Korea's auto exports to the U.S. jumped 80 percent from 2011 to $18.49 billion in 2015, while its imports of American-made cars soared 380 percent.

The USTR said the two sides discussed market access and tariffs during the negotiation, noting it emphasized, "steps to rebalance the agreement to improve the large trade deficit in industrial goods, including autos and auto parts."

"These negotiations are an example of the Trump administration's commitment to making the trade deals fair and reciprocal," U.S. Trade Representative Robert Lighthizer said in a statement.

"We must build on these negotiations with substantive and expeditious progress that will benefit the American people. In every trade relationship, the United States will stand up for U.S. workers and manufacturers, especially those facing serious injury or harm by unfair trade practices," he said.

Kim Su-a  edt@koeapost.com

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