US, South Korea to revise trade pact with currency side-deal

File photo. Photograph:( Others )

Reuters Washington, DC, USA Mar 28, 2018, 08.18 AM (IST)

The United States and South Korea agreed to revise their six-year-old trade pact with a side deal to deter competitive currency devaluation by Seoul and with concessions for US autos and pharmaceutical companies, Trump administration officials said on Tuesday.

They told reporters that the deal includes provisions outlined by South Korean officials on Monday, including a 20-year extension of the 25-percent US tariff on pickup trucks and a doubling of the Korean import cap on autos that meet US-specifications to 50,000 per manufacturer per year.

The agreement, cobbled together quickly with only a few rounds of negotiations under Trump's threat of withdrawal, will include a side-letter that requires South Korea to provide increased transparency of its foreign exchange interventions, with commitments to avoid won devaluations for competitive purposes.

The currency deal, final details of which are still being negotiated between the US Treasury and South Korea's Ministry of Strategy and Finance, is considered a "side letter" that will not be enforceable with trade sanctions.

Many US lawmakers, particularly Democrats, had opposed the 2015 Trans-Pacific Partnership trade deal because it had a similar currency manipulation side-agreement that could not be enforced. The revised KORUS will be the first US trade deal with a currency side-deal.