“This is both a good deal for both countries and a very big deal in the history of U.S. trade negotiations,” said one senior administration official who called the agreement “visionary and innovative.”
Details of the deal were communicated to reporters in a Tuesday evening phone briefing.
One of the officials said that this deal “underscores a pattern of failure by previous administrations to negotiate fair and reciprocal trade deals that benefit both countries.”
President Donald Trump directed the U.S. Trade Representative (USTR) to renegotiate the deal. USTR did so in coordination with other U.S. agencies.
Officials hailed the new deal as a “big win for American companies and American workers.”
The KORUS trade agreement between the two countries was negotiated under the George W. Bush administration but did not have enough support from Congress and stakeholders at the time. After some renegotiation under the Obama administration, the deal finally had enough support to go into effect in March 2012. Trump officials described the result of the deal as not performing as expected and even in some cases “disastrous.”
One of the biggest problems under KORUS has been U.S. automobile exports. Roughly 80 percent of the trade deficit in goods with South Korea is attributable to autos and auto parts, according to the officials, one of whom identified autos and trucks as a “core driver of the deficit.”
Under the new deal negotiated by the Trump administration, the U.S. will extend a 25 percent tariff on imports of pickup trucks to the U.S. until the year 2041. This is a “big win for U.S. truck producers and the workers,” said one of the officials. Over the past five to six years of the KORUS agreement, U.S. exports of automobiles to South Korea, those built to U.S. safety standards, were capped at 25,000 per manufacturer, per year. An official said this created an economies of scale problem. Under the new agreement, that cap has been raised to 50,000.
The new agreement also reduces some of South Korea’s regulatory burdens to trade of automobiles and auto parts as well as some labeling regulations. One official said the changes will “create a suite of outcomes that are going to make it a lot easier for...
