The National Assembly received a report from the government regarding the results of the U.S.-Korea tariff negotiations. While the ruling party assessed that they had "performed well," the opposition party pointed out that the automobile tariff was set at 15% and expressed disappointment.
The National Assembly's Strategy and Finance Committee and the Trade, Industry, Energy, SMEs, and Startups Committee held a hearing at 10 a.m. on the 6th, where they heard the results of the U.S.-Korea tariff negotiations from Minister of Economy and Finance Ku Youn-chul and Minister of Trade, Industry and Energy Kim Jung-kwan.
The government decided to reduce the mutual tariff rate from 25% to 15% through tariff negotiations with the United States on 31st of last month. As a condition for this, a $350 billion special strategic industry cooperation fund, including shipbuilding, was established to support U.S. investments, and it was agreed to import U.S. energy worth $100 billion.
However, the specific fund management structure and details regarding the easing of non-tariff barriers remain undisclosed, raising questions about the negotiation results. The conflicting explanations from the Korean and U.S. governments regarding major issues, such as the opening of the rice market or the distribution of fund revenues, also heightened concerns.
As controversy continued over the negotiation results, the National Assembly summoned Deputy Prime Minister Ku Youn-chul and Minister Kim Jung-kwan for inquiry. Responses from the ruling and opposition parties were mixed. The ruling party expressed that they performed well in challenging circumstances, while the opposition criticized the negotiations as a failure, claiming the effects of the U.S.-Korea Free Trade Agreement (FTA) had disappeared.
Lee In-seon, a member of the People Power Party, pointed out that "the effects of the U.S.-Korea FTA have disappeared due to this tariff negotiation," adding that "the tariff for Japan was 2.5%, and we were at 0% (thanks to the FTA), but now it's equally at 15%." He noted, "It's like giving up 2.5% without any return."
Cheon Ha-ram, a member of the Reform Party, also raised the same issue. He remarked, "Originally, the tariff for Korean automobiles was 0%, while Japan and the European Union (EU) had 2.5%. Now that we are all at 15%, the competitiveness of the automobile industry has been undermined," adding that it is "not something to be proud of."
Yoon Young-seok, a member of the People Power Party, stated, "We have completely lost the advantage we had compared to our competitors, including the EU," calling it a "failed negotiation."
In contrast, the ruling party praised the negotiation as the best effort made and encouraged the negotiation team. An Do-geol, a member of the Democratic Party, stated, "To maintain our 2.5%, we had to make concessions beyond what Japan made," and noted that "Japan made concessions such as opening the rice market for 15%, while we made a strategic exchange to protect our private industry."
Jin Sung-jun, a member of the Democratic Party, also said, "It's not satisfying, but we have gotten a result that allows us to perform somewhat well due to our best efforts," adding, "I evaluate that we negotiated to the best of our ability under unfavorable conditions."
Deputy Prime Minister Ku Youn-chul and Minister Kim Jung-kwan also expressed their positions on the controversial aspects of the negotiation results. In response to concerns about the potential disappearance of the effects of the U.S.-Korea FTA due to this tariff negotiation, Deputy Prime Minister Ku stated, "For items like automobiles and steel, where the United States mainly has a large deficit, tariffs will be imposed on a per-item basis under Section 232 of the U.S. Trade Expansion Act in the future, such as semiconductors and medicines. After excluding these items, a 15% tariff will be imposed on the remaining items. Countries that have not entered into an FTA will typically see their tariffs increase by an additional 15%, so I believe the effects of the U.S.-Korea FTA still exist in this regard."
He expressed regret over not being able to secure a 12.5% tariff on automobiles, stating, "When we negotiated with President Trump, we strongly argued that as an FTA member country, we should have a tariff of 12.5%, but we couldn't achieve that."
Minister Kim Jung-kwan also mentioned, "We actively responded regarding the automobile tariff, but the U.S. side firmly presented 15% as the bottom line," adding, "We will support the automobile cooperation companies and R&D efforts to help overcome the 2.5%."
He shared some behind-the-scenes stories from the negotiations. In response to a question from Park Soo-young, a member of the People Power Party, regarding how the investment scale was determined to be $350 billion, Deputy Prime Minister Ku explained, "Initially, we suggested $150 billion, and during negotiations with the U.S., we added another $200 billion."