Trade experts call U.S.-Korea tariff deal 'a great accomplishment'

Experts view the recent Korea-U. S. tariff agreement as a positive step but caution that significant negotiations are still ahead.

From left, Korea Economic Research Institute President Jeong Cheol; Seoul National University professor Yoo Myung-hee; Federation of Korean Industries (FKI) Vice Chairman Kim Chang-beom; Choi Seok-young; adviser at law firm Lee & Ko; and Seoul National University law Prof. Lee Jae-min take a commemorative photo at the FKI Tower Conference Center in Yeouido, western Seoul, on Aug. 5. [FEDERATION OF KOREAN INDUSTRIES]

Trade experts from Korea and the United States said the recent tariff agreement between Seoul and Washington marks a meaningful step in reducing uncertainty — but warned that the most crucial negotiations are still to come.

Speaking at a roundtable hosted by the Federation of Korean Industries on Tuesday in Yeouido, western Seoul, Jeffrey Schott, senior fellow at the Peterson Institute for International Economics, said the outcome of Korea’s framework talks with the United States compared favorably to those of the European Union and Japan.

Schott described the negotiations as “a great accomplishment by very sharply focused and well prepared negotiators from Seoul,” adding that the Korean negotiators “did their best to come up with a deal that creates pathways for continuation of the strong US-Korea relationships that we have in economic matters, but also in political and security matters that Dr. Cronin will be talking about.”

Patrick Cronin, Asia-Pacific security chair at the Hudson Institute, described the agreed-upon 15 percent tariff rate as “more than a trade instrument” and “a strategic lever to deepen industrial integration across sectors vital to both national security and economic resilience.”

However, the experts also called for a reassessment of the Korea-U.S. FTA, which was once considered a competitive edge. Per the new deal, Korean-made vehicles will now face the same 15 percent tariff as those from the EU and Japan, eliminating the 2.5 percentage point advantage Korea had secured via the 2012 FTA.

While Schott said “that doesn't mean that there isn't still great value in maintaining and supporting the Korea-U.S. FTA,” he also said “it is also important for Korea to make sure that it has reinforced its supply chain with neighboring countries and partners in Europe and in the Trans-Pacific region” considering what had “happened politically in the United States.”

“Closer ties with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would be a good place to start, especially if the European Union opens dialogue with the 12-country grouping in the near future,” said Schott.

Korean experts echoed that the focus must now shift to follow-up negotiations over nontariff barriers, defense cost-sharing and the details of a proposed joint investment fund.

“The real negotiations are just beginning,” said Lee Jae-min, a law professor at Seoul National University and former chairman of the Korea Trade Commission. “Korea must respond with precision and strategy to ensure its positions are reflected in the implementation process.”

Choi Seok-young, former ambassador to the South Korean Permanent Mission in Geneva, added that Korea should prepare for further discussions on defense cost-sharing and U.S. troop deployments in Korea, particularly during upcoming summits and in the process of formalizing the agreement.

“There are still gaps between Seoul and Washington in how to structure the $350 billion joint investment fund,” Choi said. “The Korean government needs to respond with clear principles and standards.”

Some experts also raised concerns that increased Korean investment in the United States could hollow out domestic industry.

“As Korean companies continue to invest in the U.S., concerns are mounting over the hollowing out of our manufacturing base,” said Yoo Myung-hee, former trade minister under the Moon Jae-in administration and now a professor at Seoul National University’s Graduate School of International Studies.

“It’s more important than ever for the Korean government to support domestic industry through regulatory reform and enhanced labor flexibility.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY NA SANG-HYEON, KIM SU-MIN [kim.minyoung5@joongang.co.kr]