Seoul's auto surplus to be scaled back under modified KORUS FTA: report

SEOUL, July 22 (Yonhap) -- South Korea will have its auto trade surplus expanded under the free trade agreement (FTA) with Washington but the surplus could be scaled back from its initial forecast due to the modifications agreed upon late last year, a report showed Friday.
The Korea-U.S. FTA, known as KORUS FTA, was signed in 2007 but the deal was supplemented in late December with minor modifications that mostly deal with the auto industry. The agreement has been awaiting approval from the legislatures of the two countries.
According to the report by the finance ministry, South Korea's trade surplus with the U.S. in the auto industry will increase by $488 million annually after the FTA goes into effect, down $53 million from the figure forecast under the initially agreed-upon deal.
The report forecast that South Korea's auto exports will grow by $559 million annually, while its imports will rise by $71 million. Previously, exports and imports were projected to expand $614 million and $73 million, respectively.
Under the revised terms, the two countries agreed to scale back tariff cuts for cars.
The U.S. will eliminate its 2.5 percent tariff on Korean automobiles within four years after the deal takes effect, instead of immediately or after three years as was previously agreed upon. Seoul will do its part by cutting its 8 percent tariff on U.S. car imports to 4 percent immediately.
Meanwhile, the report also analyzed the impact of the modified terms on South Korea's trade with the U.S. in the pork and medical sectors.
As both sides agreed to delay the starting year of fully removing tariffs in the pork trade by two years, South Korea might see its production loss in pork reach 93.1 billion won ($88.7 million) annually, down 7 billion won compared with the initial deal.
The revised terms in bilateral trade in the medical sector were also expected to help South Korea reduce its sales loss in the area by up to 9.7 billion won to 107 billion won, the report showed.