Uncertainty clouds tariff talks

Trade uncertainty persists for South Korea after its top diplomat failed to reach an agreement with the United States on Tuesday and avert a potential 25 percent tariff.

Foreign Minister Cho Hyun held talks with US Secretary of State Marco Rubio in Washington, where they discussed topics including shipbuilding and increasing South Korea's investments to the US, Yonhap News Agency reported.

The meeting came as Seoul steps up efforts to address the escalating tariff tension with Washington.

On Jan 26, US President Donald Trump said on social media that he would increase import levies on South Korean goods from 15 percent to 25 percent, noting that South Korea's legislature has yet to enact a bilateral trade agreement authorizing a $350 billion investment in the US.

Cho explained Seoul's implementation efforts and proposed to Rubio that there should be communication and consultation between relevant trade authorities, according to South Korean media reports.

However, the issue of a potential tariff hike was absent from the US State Department's official readout of the meeting.

The omission points to an agenda mismatch between the two countries, said Kang In-soo, a professor of economics at Sookmyung Women's University in Seoul.

"For South Korea, tariffs are a macro-critical emergency," Kang told China Daily. "Therefore, Seoul elevates it to the foreign ministerial level and frames it as an alliance issue that needs 'understanding' and de-escalation."

The rising tariffs could deal a direct blow to South Korea's exports and corporate earnings, with spillover effects extending to economic growth, employment and foreign exchange volatility, he said.

By contrast, the US appears to view the issue more as a matter of trade implementation and has avoided publicly signaling that tariffs are "on the table" for concessions, he added.

Cho's visit followed a weeklong trip to the US by South Korean Trade Minister Yeo Han-koo, which likewise ended without a tangible outcome. Yeo was unable to secure a meeting with US Trade Representative Jamieson Greer.

Speaking to reporters on Tuesday after concluding his visit, Yeo said the US administration was working to formalize plans to raise "reciprocal" tariffs and other levies on South Korea.

During his trip, which began on Jan 29, he met officials from the US government, Congress, industry and think tanks. He said it is important to continue communication as Washington has not completely understood the differences in South Korea's institutions.

Yeo also called for a "mutually beneficial" solution to both countries through smooth consultations in the future, the trade ministry said in a statement on Wednesday.

Jang Sang-sik, head of the International Trade Research Institute at the Korea International Trade Association, said Washington is using tariffs as a regular negotiation tool.

"There is a high possibility that similar pressures will continue to arise, due to the selection of investment sectors or the pace of investment execution," he was quoted by Yonhap as saying.

At home, South Korea's ruling Democratic Party is pushing to pass a special investment bill in the National Assembly by this month or early March. On Wednesday, it agreed to form a special committee with the main opposition People Power Party to handle the legislation.

Kang of Sookmyung Women's University said South Korea should legislate in a "defensive" way to avoid locking itself into unconditional obligations that could be exploited in the next tariff cycle.

Such safeguards include reciprocity or conditional disbursement, periodic parliamentary reauthorization, and annual caps on investment.

"South Korea should legislate safeguards and conditionality, not an automatic 'write-the-check' mandate," Kang said.

kelly@chinadailyapac.com