US, South Korea Unveil Trade Agreement Framework
Synopsis
The US agreed on a 15 per cent tariff rate for South Korean imports of wood products and pharmaceuticals, while no tariffs would be charged on imports of South Korean aircraft parts and generic drugs. Also, the US made it clear that the tariff rate on semiconductors would be decided based on a future agreement covering a volume of semiconductor trade as large as South Korea's. It means semiconductor tariffs would be at par with its key competitor, Taiwan. On the issue of addressing non-tariff barriers in South Korea's agricultural and digital services sectors, including meat, both the US and South Korea agreed to work together.
A month after United States President Donald Trump and South Korean President Lee Jae Myung meeting, the two countries released a joint fact sheet on a trade deal.
According to the trade deal, both Washington and Seoul agreed to set tariffs on US imports of Korean autos and auto parts at 15 per cent, bringing the same rate as par with the Japanese competitors. Earlier, the US imposed a 25 per cent tariff on Korean goods.
As per the details, the effective date on auto tariffs will be from 1 November onwards, following a bill on the $350 billion investment package being submitted to the South Korean Parliament.
Tariffs On Other Products:
The US agreed on a 15 per cent tariff rate for South Korean imports of wood products and pharmaceuticals, while no tariffs would be charged on imports of South Korean aircraft parts and generic drugs.
Also, the US made it clear that the tariff rate on semiconductors would be decided based on a future agreement covering a volume of semiconductor trade as large as South Korea's. It means semiconductor tariffs would be at par with its key competitor, Taiwan.
On the issue of addressing non-tariff barriers in South Korea's agricultural and digital services sectors, including meat, both the US and South Korea agreed to work together.
Apart from this, both the countries also agreed to work together on online platform regulations and cross-border transfers of location data.
As part of trade deal, Korea Gas signed an agreement to buy about 3.3 million metric tons of US liquefied natural gas a year in long-term agreements.
Trade Deal On Investments:
South Korea would pay $200 billion in cash in phased installments to the US as part of the $350 billion investment fund. It would be capped at $20 billion a year in an effort to maintain won stability.
Also, South Korea, to minimise potential impacts on the domestic currency market, would work towards sourcing the US dollars.
While the remianing $150 billion would be earmarked for shipbuilding cooperation, South Korea said, adding, it would include loans and guarantees from policy institutions for ship financing. The rest of the amount could be private-sector investments by South Korean companies.
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