Yoon to Propose Improvement of '232 Trillion Steel' at Korea-US Summit?

Government Proposes Improvements to US Steel Section 232... "Ongoing Consultations Through Commerce Department"
Trump's Symbol of Protectionism... Limits on Korean Steel Imports Since 2018
Moon Administration's Negotiation Attempts Stalled... Will Summit Break the Deadlock?

President Yoon Suk-yeol responding on his way to work
(Seoul=Yonhap News) Photo by Seo Myeong-gon = On the morning of May 20, when U.S. President Joe Biden officially visited Korea, President Yoon Suk-yeol is answering questions from the press as he heads to the Yongsan Presidential Office building. 2022.5.20
seephoto@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The possibility of progress in negotiations to improve Section 232 of the Trade Expansion Act has increased, centered around the Korea-US summit. The government has decided to use this summit as a turning point for renegotiating the Trade Expansion Act, a long-standing issue for the domestic steel industry, and is reviewing it as a discussion agenda.

According to related ministries on the 20th, the government plans to propose negotiations to improve Section 232 of the Trade Expansion Act to the US side at the Korea-US summit. Discussions on Section 232 are expected to be handled as an extension of economic security issues such as supply chains. However, it is reported that the option of President Yoon Suk-yeol directly proposing this to US President Joe Biden is still under consideration. A government official said, "There is a consensus within the government on the importance of Section 232 of the Trade Expansion Act," adding, "We plan to continue consultations through the US Department of Commerce even after the (Korea-US) summit."

Section 232 of the Trade Expansion Act symbolizes the protectionist policies of former US President Donald Trump. Under this provision, the US president can restrict imports and impose additional tariffs if certain imported goods are deemed to threaten national security. Previously, in 2018, the US imposed high tariffs of over 25% on imported steel based on Section 232. South Korea avoided high tariffs through negotiations but was limited to an annual export volume to the US of 2.63 million tons, which is 70% of the average export volume from 2015 to 2017 (3.83 million tons).

Section 232 has become a long-standing issue for the steel industry over the past four years because the quota system imposed by the US directly led to a decrease in steel exports. According to the Korea Iron & Steel Association, steel exports to the US decreased by about 45%, from 3.54 million tons in 2017 to 1.94 million tons in 2020. Although exports recovered to 2.69 million tons last year, this is still nearly 1 million tons less compared to before the quota system was introduced.

The government was not unaware of the importance of Section 232, but the US response was lukewarm. The meeting between the trade chiefs of both countries in March reflected this situation. At that time, former Vice Minister for Trade Negotiations Yeo Han-gu urged Katherine Tai, US Trade Representative (USTR), to negotiate improvements to Section 232. However, Representative Tai drew a line, saying, "South Korea is already in a better position than other countries."

Experts predict that this summit could be a "turning point" for the stalled discussions on improving Section 232. With Korea-US supply chain cooperation expected to accelerate around the Indo-Pacific Economic Framework (IPEF), the possibility of the US bringing Section 232 to the negotiation table has increased. The new government’s clear stance on strengthening the Korea-US alliance also raises expectations. Professor Jeong In-kyo of Inha University’s Department of International Trade said, "There are many areas where the new government aligns with US policy directions," adding, "The situation has changed compared to the previous government, which pursued strategic ambiguity."

However, there is speculation that it may take time to elicit a positive response from the US. The US is facing midterm elections in November. With President Biden’s approval rating recently hitting a historic low, the US government is likely to consider the interests of its domestic steel industry. Another government official said, "The steel industry is one of the major interest groups for the Biden administration," adding, "The US side is also talking about the (midterm election) situation, so it will likely be toward the end of the year before we know how the discussions will proceed."

This content was produced with the assistance of AI translation services.