As the United States' tariff imposition is postponed until August 1, our government announced plans to accelerate South Korea-U.S. negotiations over the next three weeks. While the U.S. continuously raises non-tariff barrier issues at the negotiating table, trade authorities believe that resolving non-tariff barriers is difficult and are focusing on the 'manufacturing cooperation plan' in negotiations.
South Korea and the United States have effectively eliminated tariffs through the free trade agreement (FTA). Accordingly, non-tariff barriers have been raised as a major topic of negotiation. Non-tariff barriers refer to all trade restrictions excluding tariffs and can complicate the export process or make sanitary inspection procedures cumbersome, leading to increased time and expense for exporting countries and producers.
Currently, the representative non-tariff barrier that the U.S. is raising issues about is the agricultural market. The U.S. has demanded, through the National Trade Estimate (NTE) report, the allowance of U.S. beef imports for over 30 months, an expansion of rice imports, and the allowance of genetically modified organisms (LMO) imports.
However, from South Korea's perspective, it is difficult to fully accept these demands. Importing agricultural products and beef is sensitive, as it poses significant political burdens, such as pushback from farmers. The possibility of prolonged negotiations to resolve non-tariff barriers in this area is also considerable.
Choi Seok-young, an advisor at Lee & Ko, noted, "Non-tariff barriers are highly sensitive issues with significant political repercussions, making coordination difficult," and warned that focusing on this issue could make it hard to reach an agreement by August 1.
Earlier, at the 'Korea-U.S. Tariff Measures Negotiation Public Hearing' held by the Ministry of Trade, Industry and Energy on the 30th of last month, there was considerable backlash from the agricultural sector. Min Kyung-cheon, president of the National Beef Association, argued, "Allowing beef imports for over 30 months will increase consumer distrust and could actually reduce the volume of U.S. beef imports."
Seo Jin-kyu, director of GS&J Institute, stated, "Agriculture is already in a deficit situation in trade with the U.S., and according to Trump-style logic, Korea should rather impose tariffs on U.S. agricultural products," and pointed out, "Even if imports increase, it will be difficult to resolve the trade deficit as the U.S. desires."
The government emphasizes that the opening of the domestic agricultural and livestock products market is a sensitive issue and that the U.S. is in a surplus in this area. However, the U.S. is also strongly demanding an expansion of rice imports from Japan, which could lead to increased pressure on related issues.
Recently, digital trade has also emerged as a key issue in trade negotiations. The U.S. is negotiating the Digital Markets Act (DMA) of the European Union (EU) and has succeeded in leading Canada to withdraw its digital tax.
According to the NTE report, the U.S. has defined South Korea's digital policies as 'barriers' citing ▲ restrictions on foreign cloud services ▲ network usage fees legislation ▲ platform regulation legislation. It is also known that the U.S. has demanded the export of high-precision map data requested by Google as one of its major requirements.
The U.S. has recently expressed opposition to the online platform regulation bill being promoted by the Lee Jae-myung government. The bill aims to prevent the abuse of dominant positions and the negative effects of monopolies by large domestic and foreign platforms.
According to the bill, companies like Naver and Kakao are included in the regulation of the Online Platform Act. However, the U.S. government believes that this Online Platform Act will protect South Korean platforms. On the 3rd, 43 U.S. House representatives sent a letter to the Office of the U.S. Trade Representative (USTR) requesting an official response, arguing that the legislation by the Fair Trade Commission is excessively targeting U.S. digital corporations.
Yeo Han-koo, head of the Trade Negotiation Division of the Ministry of Trade, Industry and Energy, remarked, "The U.S. has requested improvements in market access and non-discriminatory treatment for its corporations in the digital sector," and stated, "The government will respond flexibly, considering both the level of U.S. demands and domestic political and security sensitivities."
Trade experts advise that rather than raising non-tariff barriers, which are sensitive for both countries, the focus should be on real mutual benefits such as manufacturing cooperation.
Choi Yong-min, former head of the Korea International Trade Association’s international trade research institute, stated, "It is advisable to prepare a negotiation plan for non-tariff barriers after a certain amount of time and public opinion gathering process," and continued, "It would be wise to discuss cooperation in broad sectors first and leave non-tariff issues for follow-up negotiations."