S. Korea Sees Speedy Trade Talks With U.S., But ‘Uphill Battle’ Ahead

OSONG, South Korea (Reuters) —

South Korea’s Trade Ministry said on Monday that it anticipates an “uphill battle” to revise its bilateral trade deal with the United States, but it expects Washington to proceed with the talks in a speedy manner.

Trade Minister Kim Hyun-chong said that in the first round of talks in Washington on Friday, the U.S. focused on eliminating non-tariff barriers in the auto sector.

South Korea raised the issues of investor-state dispute settlement (ISDS) mechanism and trade remedies during the opening talks, he said, without elaborating further.

A second round of talks has not been scheduled.

Disagreements over the trade pact that became effective in 2012 risk alienating Seoul and Washington at a time when North Korea is seen trying to create a fissure in the alliance.

The talks stem from President Donald Trump’s unhappiness with the existing pact. In April, Trump told Reuters he would either renegotiate or terminate what he called a “horrible” trade deal that has doubled the U.S. goods trade deficit with South Korea since 2012.

On Monday, Kim told reporters that he expects “an uphill battle for the talks. There is lots of work to do during a short period of time.”

He said he expected Trump’s administration to step up protectionism moves to rally his domestic supporters this year.

But South Korea’s trade ministry said that while Washington seeks to significantly change the North American Free Trade Agreement (NAFTA) with Mexico and Canada, the U.S. wants a “partial revision” of its deal with Seoul, which will speed up the talks.

“They are trying to take a different approach on KORUS-FTA from that on the NAFTA,” Yoo Myung-hee,  director general of the ministry, told reporters.

Yoo, who led the latest trade talks with U.S., also said “all types of auto issues were raised” in Washington, without giving details.

A top priority for the Americans is maintaining a tariff of 25 percent on imports of Korean pickup trucks, which the existing deal envisaged to be phased out from 2019, sources have said.

South Korean auto companies believe Washington will also seek to increase the 25,000-vehicle per U.S. automaker threshold for shipments to South Korea that can enter the country without meeting Seoul’s domestic safety regulations. South Korea’s vehicle emissions rules are likely to be also on the table, they said.

The Trade Ministry also earlier expected U.S. to demand tougher rules on regional content for the auto sector.

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