Extension of Tariff Elimination on Freight Automobile Exports up to 20 Years·Exemption from Tariffs on Steel under Article 232
The negotiations for the revision of the Korea-U.S. FTA have been concluded under a cloud of great concern among the entire nation. Although the final procedures are still under way, it has been resolved in effect. The United States has decided to exempt
Korea from tariffs on steel and aluminum products under Article 232 of the Trade Expansion Act, and Korea has decided to extend tariff elimination on freight automobile exports and to lower the automobile safety and environmental standards.
The two countries agreed to exempt Korea from tariffs on steel products under Article 232 of the Trade Expansion Act. Meanwhile, Korea’s steel exports to the United States were set to a quota of 74% compared to the previous year, which corresponds to an average export volume of 3.83 million tons for the period from 2015 to 2017.
The Ministry of Trade & Industry (MOTIE) estimated that the uncertainty of Korean companies was eliminated by securing 74% of exports to the USA last year without additional 25% tariffs, with the early exemption of Korea.
Boards, one of the nation’s main export items, in particular, secured a quota of 111 % compared to the previous year, yet the quota on steel pipes, such as oil country tubular goods (OCTG), was confirmed at 1,040,000 tons.
Accordingly, MOTIE expected a significant decrease compared to last year’s exports of 203 million tons and stated that it would plan to draw up measures to reduce damages including diversification of exports and boosting domestic demand. Talks on steel products are scheduled to commence on May 1.
South Korea also pushed on its concerns through the amendment of the agreement in the field of investor-state dispute settlement (ISDS) and trade remedies through a revised agreement. In regard to the ISDS, it incorporates factors related to the prevention of investors’ abusive litigations and the government’s legitimate policy mandates and has decided to ensure transparency in trade remedies.
It also announced that the uncertainty has been removed by revising the rules of origin standards for some textile items and achieving a position on the further opening of the agricultural and livestock market, a core sensitive area of the country, and the use of U.S.-made auto parts.
On the other hand, instead of obtaining steel, agricultural products, and ISDS, it was decided to step back in the automotive field. Korea has extended the tariff elimination on freight automobile exports to the USA from 2021, the tenth year, up to 20 years until 2041.
In addition, provided that a company complies with American automobile safety standards up to 50,000 units per year, it will be regarded as compliant with the safety standards of Korea, and the detailed test procedures and methods of gasoline vehicles using exhaust gas will be acknowledged alongside.
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