Seoul: South Korea has successfully resisted the United States' demands for further market opening in the rice and beef sectors as part of a new trade agreement, the presidential office announced. The deal, reached after intense negotiations, also ensures that Korean semiconductors and pharmaceuticals will not face higher tariffs compared to other countries.
According to Yonhap News Agency, the agreement, finalized just before the deadline, reduces reciprocal and auto-specific tariffs from 25 percent to 15 percent. Kim Yong-beom, the presidential chief of staff for policy, revealed that the deal includes a significant $350 billion investment pledge from Korea in the U.S., with $150 billion designated for the shipbuilding industry and $100 billion allocated for U.S. energy purchases.
The agreement stipulates that tariffs on semiconductors and pharmaceuticals will not be disadvantageous for Korea, granting the nation most-favored nation treatment. However, the deal does not address tariffs on steel and aluminum, both significant Korean exports. Despite pressures, South Korea's negotiation team maintained its stance against opening markets further for rice and beef, citing food security concerns.
Farmers' groups had previously protested against lifting bans on U.S. beef from cattle aged 30 months or older, a contentious issue since the 2008 mad cow disease scare. Kim emphasized that the U.S.'s push to open agricultural markets was resisted due to the sensitivity of the sector.
Additionally, proposed U.S. regulations on online platforms and restrictions on high-precision map data exports were excluded from the agreement. While President Trump mentioned a summit for further details, arrangements are underway, with Foreign Minister Cho Hyun scheduled to meet U.S. Secretary of State Marco Rubio.
The deal is seen as a measure to prevent a worst-case scenario, aligning tariffs with those faced by South Korea's key trading partners such as Japan and the European Union. However, there are concerns about the potential nullification of trade advantages previously enjoyed under the KORUS FTA, especially in the auto sector. South Korean vehicles, previously tariff-free, will now face a 15 percent tariff similar to Japanese and European cars.
Kim dismissed Trump's remarks about accepting American agricultural products as political rhetoric, reinforcing that no concessions were made. The $150 billion shipbuilding industry commitment is anticipated to enhance bilateral ties, integrating Korean design and construction with U.S. software expertise in future technologies like autonomous vessels.
The remaining $200 billion investment will support strategic sectors, aiding Korean companies' entry into the U.S. market. Kim assured that the $100 billion allocated for U.S. energy imports is manageable, suggesting potential adjustments in import sources.
U.S. Commerce Secretary Howard Lutnick's comment on profit allocation was interpreted by Kim as a reinvestment strategy, with the U.S. government managing deal-sourcing to ensure profits are reinvested domestically. Kim expressed confidence in negotiating terms that protect Korean interests.