On September 24, 2018, President Trump and President Moon Jae-in of South Korea signed a revised U.S. - Korea Free Trade Agreement (“KORUS”). According to the United States Trade Representative Robert Lighthizer, by entering into the agreement, the United States and Korea “strengthened an important economic relationship.” Mr. Lighthizer added that, in his view, the “substantial improvements to KORUS … will help rebalance our trade, reduce our trade deficit, and expand U.S. export opportunities.” Reportedly, the Administration initially entered into the negotiations with the goal of reducing the size of the U.S. trade deficit in manufactured goods with South Korea.

Although the newly revised agreement retains much of the original agreement, it modifies the agreement in several respects. Among other things, the new agreement will:

• Extend a 25 percent US tariff on Korean trucks imported into the United States until 2041. Prior to the new agreement, the tariff was scheduled to end in 2021.

• Increase the Korean quota that covers U.S. automobiles meeting U.S., but not Korean, safety standards. The annual quota will increase from 25,000 automobiles per manufacturer per year to 50,000 automobiles.

• Make it easier for U.S. exports of gasoline engine automobiles to comply with Korea’s emissions regulations. It will also require Korea to take U.S. regulations into account when setting its own fuel economy standards.

• Streamline Korea’s process for verifying the country of origin of exports from the United States.

• Amend Korea’s pharmaceuticals pricing policy to ensure the non-discriminatory treatment of U.S. pharmaceuticals exports.

Moreover, as previously reported, the newly revised KORUS will exclude Korea from the Section 232 tariffs on steel exports in exchange for Korea’s agreement to cap its steel exports to the United States. Under the agreement, Korea will limit its U.S. exports of steel to a level that equals 70 percent of the annual average of Korea’s exports of steel to the United States between 2015 and 2017. The agreement does not, however, address the Administration’s tariffs under section 232 on Korean imports of aluminum. As a result, the 10 percent tariff under section 232 will still apply to Korean imports of aluminum into the United States.

Although the Administration announced that the negotiations would result in an agreement that would limit Korea’s ability to improve its export performance through currency devaluation, no such agreement has been reached. Instead, the Office of the United States Trade Representative (“USTR”) stated that the Department of the Treasury will continue to discuss the issue with Korea’s Ministry of Strategy and Finance. USTR added that a memorandum of understanding is being finalized which will prohibit monetary devaluation and exchange rate manipulation.

Democrats in the House and Senate have expressed concerns about the failure to reach an agreement on the currency issue, with Senator Ron Wyden (D-OR) stating that, although “{t}he White House went on record in March touting a currency deal with Korea,” such an agreement “does not exist.”

The newly re-negotiated KORUS does not need formal congressional approval to become effective but must be presented to Congress for a 60-day consultation period. As of September 26, 2018, the South Korean parliament had not yet formally approved the agreement.