Seoul: South Korea has successfully negotiated a trade agreement with the United States that avoids further opening of its rice and beef markets, while securing guarantees against higher tariffs on Korean semiconductors and pharmaceuticals, the presidential office announced. The agreement, finalized through urgent negotiations ahead of a critical deadline, reduces reciprocal and auto-specific tariffs from an initial 25 percent to 15 percent.
According to Yonhap News Agency, Kim Yong-beom, the presidential chief of staff for policy, highlighted that the deal includes a US$350 billion Korean investment in the U.S., with significant portions allocated to the shipbuilding industry and U.S. energy purchases. The agreement ensures that tariffs on semiconductors and pharmaceuticals will remain competitive, granting Korea most-favored nation treatment.
Despite the successful negotiations, the deal does not address sectoral duties on steel and aluminum, maintaining the existing 50 percent tariffs on these major Korean exports. The Korean negotiation team stood firm on retaining restrictions in the agricultural sector, particularly concerning rice and beef, amid strong opposition from farmers' groups.
Kim emphasized that the U.S. pressure to open these markets was resisted due to food security concerns and the sensitivity surrounding the agricultural sector. He also noted that U.S. demands related to online platform regulations and high-precision map data export restrictions were excluded from the agreement.
The deal is seen as a preventive measure against a worst-case scenario, aligning South Korea's tariffs with those of its key trading partners. However, concerns remain about the potential impact on trade advantages previously held under the bilateral free trade agreement (FTA) with the U.S., particularly in the auto sector.
Under the new terms, South Korea will lift the annual cap on U.S.-made vehicles meeting Korean safety standards, although the immediate impact is expected to be minimal as no U.S. automaker currently exceeds the existing threshold. Kim refuted claims of concessions on agricultural products, stating that no agreements were made regarding rice and beef.
Kim also highlighted the $150 billion commitment to the shipbuilding industry as a pivotal move to enhance bilateral ties, with expectations of significant synergy in emerging fields like autonomous vessels. The remainder of the investment fund will target strategic sectors, aiding Korean companies' entry into the U.S. market.
The $100 billion earmarked for U.S. energy imports is considered manageable, with potential adjustments in import sources. Kim downplayed remarks by U.S. Commerce Secretary Howard Lutnick about profit distribution, interpreting them as part of a reinvestment strategy to benefit the U.S. economy.
Overall, Kim expressed confidence in managing the investment fund to protect South Korea's interests, ensuring that profits are reinvested in the U.S. rather than being immediately extracted.