US-Korea Working-level Trade Talk Next Month

Early next month, a working-level US-Korea trade talk (“the Talk”) is scheduled to be held. At the meeting, It is predicted, the US will aggressively push the Korean government to open more of its markets for, especially, autos and medicine.

According to the July 24th joint press release by the Ministry of Finance and Economy and the Trade Information Team (TIT) of the Ministry of Foreign Affairs and Trade, Korean and US will hold a quarterly session of the Talk from August 7-8 in Seoul to iron out the differences.

Park Hyo-sung at the TIT in charge of trade with North American countries foretold, “The US deficits are getting worse. During the first quarter of this year, the deficit reached 4.3% of the US GNP. Thus, US will push for opening markets more aggressive than any other time.”

▽ More Aggressive Request for Opening of Auto and Medicine Industries = These industries lie at the center of the Talk. US has not been not satisfied with the temporary extension of the special sales tax break on cars by 2 months ending in August. The tax break was originally supposed to terminate by the end of June. US has also strenuously requested for lowering of the current customs tax on imported cars (i.e. 8%) to that of US (i.e. 2.5%).

Korea, on the other hand, has made it clear that it is not considering additional extension other than the one ending in August. Korea will counter-attack the US arguments by stressing that its customs tax is not so high compared with those of other countries and that any discussion of lowering taxes should be done via the WTO.

Another main topic will be the price of medicine produced by the multinational companies, a hot potato between the two countries nowadays. US is against the implementation of the Price Guideline, and is expected to request for allowance of multinational companies in the decision-making procedure. Korea, however, does not seems to budge at all.

▽ Tug of War Regarding Steel Products and Produce = On the contrary, Korea will be offensive regarding steel products. Korea has dealt with the US Safe Guard in cooperation with Japan and the EU. The goal of Korea this time is to make some competitive Korean steel products exempted from the Guard.

With regard to the produce, each country is supposed to come up with its own request. US is expected to push for more quotas for cherry and dried potato, for extension and lower customs tax on fresh potato. In the meanwhile, Korea will ask for simplification in obtaining importation permits and in inspection procedure for the produce in order to open up the US market for apples and other fruit.

As to the US request for repealing of the screen quota, Korea offers a separate talk to deal with the matter.

Joong-Hyun Park sanjuck@donga.com