On Monday, the United States formally exempted South Korea from a 25 percent tariff on steel imports. Washington will instead impose an annual export quota equivalent to 70 percent of Korean steelmakers' recent shipment volume.
Trade officials in Seoul welcomed the move. “The U.S. step has finally resolved uncertainty on our steel exports, giving a competitive edge to Korean steelmakers,” they said.
Barely 24 hours later, however, the U.S. International Trade Commission said it had determined that America's industry was being “materially injured” by imports of carbon and specific alloy steel rods from five countries, including Korea.
Industry watchers here view that the 41.1 percent antidumping duties on wire rods would offset any competitive gains Korean exports may have with the exemption of additional tariffs. The domestic industrialists are understandably enraged, saying the shipment quota and punitive duties will give them “double trouble.”
The reality on the bilateral trade front seems to be significantly different from the self-praising comments made by Minister of Trade Kim Hyun-jong after he wrapped up the renegotiations on the Korea-U.S. Free Trade Agreement last month. “Korea has received an export quota roughly equal to 70 percent of its annual average shipment between 2015 and 2017, and will be able to ship that volume without additional tariffs,” Kim said at the time.
What Kim failed to point out was the U.S. antidumping duties that had been applied to more than 80 percent of Korean steel exports remained unchanged. Kim added Seoul had secured the procedural transparency of the U.S. investigations for import restraint, but steelmakers here don't seem to know what has changed in this regard, either.
Government officials say the imposition of antidumping duties on wire rods was the “result of investigations that had begun well before the start of FTA bargaining.” They may be right technically, but this is not a matter of apportioning blame. The Korea International Trade Association stated, “It is not fair to limit export volume with a quota and slap on antidumping duties, which is little different from double taxation.”
Trade officials should come up with plausible explanations for the U.S. move and work on practical countermeasures.