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Korea Herald
28-05-2025
- Business
- Korea Herald
S. Korea launches feasibility study on trade negotiation items with US: sources
South Korea is checking the economic feasibility of various items that may come as the result of trade negotiations with the United States to assess the impact of such items on the national economy, government sources said Wednesday. The Ministry of Trade, Industry and Energy recently asked the Korea Institute for International Economic Policy to conduct a feasibility study on agenda items of the ongoing trade negotiations between Seoul and Washington, according to the sources familiar with the matter. The two countries have been working to craft a package deal on trade issues, including tariffs, non-tariff barriers and economic cooperation, by July 8, when the 90-day pause on the Donald Trump administration's reciprocal tariffs will end. South Korea has been seeking to gain a full exemption or reduction of the Trump administration's 25 percent reciprocal tariffs for the country, as well as sectoral tariffs on steel, automobile and other imports. In a working-level meeting last week, the office of US Trade Representative urged Seoul to resolve non-trade barrier issues listed on its 2025 National Trade Estimate Report on Foreign Trade Barriers, a Seoul trade official has said on the condition of anonymity. The NTE report had laid out a wide range of Korea's non-tariff measures, including its import ban on American beef from cattle aged 30 months or older, South Korea's "offset" defense trade policy, digital trade barriers, such as restrictions on the export of location-based data, and emission-related regulations on imported cars, as well as pricing policies for pharmaceuticals. Though details of Washington's requests have not been disclosed, industry watchers say the US may have also raised an issue with Seoul's high tariffs on rice imports, which Trump has mentioned as an example of trade barriers by foreign countries in his speech announcing the country-by-country reciprocal tariffs in early April. Seoul's baseline tariff on rice imports stands at 513 percent, but the country actually implements only a 5 percent tariff on a yearly import quota of up to 132,304 tons of US rice. South Korea's trade treaty law requires the government to conduct economic feasibility studies on new trade deals that may have a significant influence on the national economy and submit a report on the negotiations to the National Assembly. South Korea plans to pass the baton of the ongoing tariff negotiations with the US to the next government as the country is set to hold its presidential election next Tuesday, with the incoming administration widely expected to take office the very next day. "The US seems to have put many issues on the table as part of its negotiation strategy, but given the timeline and South Korea's domestic situation, Washington likely understands that it is difficult to reach a conclusion on these matters in the near future," a government official said. (Yonhap)
Korea Herald
28-03-2025
- Business
- Korea Herald
Global trade protectionism to push up inflation, volatility in FX markets: think tank
The recent expansion of trade protectionism will put pressure on the global economy, leading to inflation and higher volatility in currency exchange rates, a South Korean state-run economic think tank said Friday. The Korea Institute for International Economic Policy made the assessment in a meeting of trade experts hosted by the Ministry of Trade, Industry and Energy, where participants discussed the shifts in trade policies of major economies, according to ministry officials. KIEP said the government-led growth policies of emerging countries in the past gave justification to developed countries to expand protectionist policies during economic downturns. But the ongoing tariff war cannot be a fundamental resolution to problems involving oversupply and slow economic growth, it said, noting that tariffs will only put pressure on the global economy by instigating high inflation and exchange rate volatility. The US imposed 25 percent tariffs on all steel and aluminum imports earlier this month, with plans to introduce duties on auto imports, as well as reciprocal tariffs for trading partners with high trade surpluses with the country. The European Union and other major economies have been scurrying to devise countermeasures against Washington's moves. "The trade environment has been rapidly changing due to economic security issues, the development of artificial intelligence technology and the spread of protectionist trade policies," said Lee Jae-keun, director general for new trade strategy and policy at the ministry. "The government and trade-related institutions should work to swiftly respond to shifts in the trade policies of the US and the EU, and help open new opportunities for local industries by devising trade policies tailored to different markets." (Yonhap)
Korea Herald
06-03-2025
- Business
- Korea Herald
[Editorial] Negative economic indicators
South Korea suffers 'triple minus' in January amid negative export outlook due to US tariffs South Korea's economy faces pressure on multiple fronts ranging from industrial output and facility investment to the outlook for exports and consumer prices amid growing concerns about a global trade war. The country's industrial output, retail sales and facility investment all fell in January from a month earlier, data showed Tuesday. The figures marked the first 'triple minus' since October, a signal that is widely perceived as a warning sign for the country's real economy. According to data released by Statistics Korea, industrial production tumbled 2.7 percent in January from the previous month, marking the steepest contraction in nearly five years, since the onset of the COVID-19 pandemic in February 2020. The decline in industrial output reflected weaker production in major sectors from manufacturing to construction. Chip production climbed 20.8 percent on-month, but automobile production dropped 14.4 percent over the same period and output in the construction sector, closely watched by policymakers as an indicator of economic activity, recorded a ninth consecutive on-month decline. Particularly concerning was facility investment, which suffered a sharp 14.2 percent drop last month, the worst performance since October 2020. Retail sales, a gauge of private spending, showed no signs of recovery. Despite government efforts to stimulate tepid domestic demand by designating additional public holidays around the Lunar New Year, retail sales fell by 0.6 percent in January from a month earlier. The outlook for exports, a pillar of South Korea's economy, appears equally grim. According to a report released by the Korea Institute for International Economic Policy, an escalation in the global tariff war initiated by US President Donald Trump could shrink the country's total exports by as much as $44.8 billion. Given that the country's total exports amounted to $683.8 billion last year, such a scenario would wipe out approximately 6.6 percent of export revenue. Exports could suffer more than expected largely because Trump is now expanding his tariff offensive from Canada, Mexico and China to other key allies, including South Korea. Addressing a joint session of Congress on Tuesday, Trump claimed that South Korea's average tariff is four times higher than that of the US, even though the two countries have been trading the vast majority of items duty-free under a bilateral free trade agreement. 'South Korea's average tariff is four times higher. Think of that ... four times higher, and we give so much help militarily and so many other ways to South Korea,' Trump said. This hostile remark suggests serious trouble for South Korean policymakers since Seoul has remained in a precarious leadership vacuum due to President Yoon Suk Yeol's impeachment over his martial law decree last December. South Korea's macroeconomic indicators are also on shaky ground. The country's real gross domestic product grew 2 percent last year in line with the Bank of Korea's estimate, but major institutions predict that the country's GDP growth in the first quarter this year could stagnate at 0.2 percent from the previous quarter. This means that South Korea, already faced with weakening economic fundamentals, must also deal with a tough trade war. On top of these challenges, South Korea's consumer prices increased 2 percent from a year earlier last month, affected by the weakening of the Korean won against the US dollar, which drove up import costs, according to the data released by Statistics Korea on Thursday. The figure marked the second consecutive month in which the key gauge of inflation rose to the 2 percent level. Given the strong economic and trade headwinds, policymakers must join forces with major parties and the business community to devise stronger policy measures to prop up the embattled Korean economy.
