US-South Korea trade talks pit pickup trucks against nuclear threat

The United States and South Korea on Friday completed the first round of review talks on a bilateral trade deal with Washington saying there was "much work to do" to reach a new pact. Since taking office in 2017, President Donald Trump has pulled the United States out of talks on a 14-nation Asia-Pacific trade pact, started negotiations on a new deal for the North American Free Trade Agreement between the US, Mexico and Canada and initiated a review of the 2012 Korea deal.
Washington has taken a hard line in the NAFTA talks, which appear stalled with just two rounds of negotiations left, saying that concessions are the only way for Canada and Mexico to keep the deal. The Korea trade talks will have to strike a balance between Trump's domestic agenda and the need to contain a nuclear-armed North Korea. A swift agreement would have aided that, officials from both sides told Reuters ahead of the talks on Friday.
The US goods trade deficit with South Korea has doubled since the 2012 signing of the US-Korea Free Trade Agreement (KORUS). Almost 90 percent of the 2016 shortfall of $27.6 billion came from the auto sector, an issue the United States is expected to press hard in the Washington talks. A quick Korea deal could give Trump his first trade victory at a time when NAFTA negotiations are dragging on and pressure on China to change trade practices has yielded little progress.
The talks, led by Assistant US Trade Representative Michael Beeman and Yoo Myung-hee, director general for FTA negotiations at South Korea's trade ministry, begin at a time of heightened tension with Pyongyang. The United States had primarily raised the issue of the automobile sector, Yoo told reporters in Washington after the first round of talks, Yonhap News Agency said, but gave no 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, according to a US official and a South Korean car industry source.
South Korea has two major automakers, Hyundai Motor and Kia Motors, that rely heavily on exports because of the small size of the domestic market. Critics say South Korea discriminates against imports with a range of non-tariff barriers. South Korean auto companies believe Washington will also seek to increase the 25,000-vehicle per US automaker threshold for US car shipments to South Korea that can enter the country without meeting Seoul's domestic industry regulations.
The official at a South Korea auto company, who was not authorized to speak to the media, also said the United States was interested in easing Seoul's vehicle emissions targets. These are viewed as discriminating against US autos.