Steel support package to be announced by late June or early July; minister warns EU of FTA violation and possible retaliation; Canada submarine contract expected; oil price cap end date under review

Trade Minister Kim Jung-kwan holds a background briefing for reporters at the Government Complex Sejong on Monday, after returning from official trips to Kazakhstan, Europe and the Middle East. [Ministry of Trade, Industry and Energy]
Trade Minister Kim Jung-kwan holds a background briefing for reporters at the Government Complex Sejong on Monday, after returning from official trips to Kazakhstan, Europe and the Middle East. [Ministry of Trade, Industry and Energy]

Trade Minister Kim Jung-kwan said South Korea has reached a positive agreement with the European Union on tariff-rate quota negotiations for steel. The government plans to announce a support package for the domestic steel industry by late June or early July, timed to coincide with the EU's finalization of the quota.

Kim, who recently returned from official visits to Kazakhstan, Europe and the Middle East, told reporters at a background briefing at the Government Complex Sejong on Monday that the TRQ agreement was the biggest achievement of the trip.

"We have a consensus that even if the overall quota is reduced, it will not be cut by as much as 46 percent — our current allocation is about 2.58 million metric tons," he said, though he declined to give a specific figure.

Starting July 1, the EU plans to reduce its duty-free steel import quota from the current 33.82 million metric tons to 18.35 million metric tons — a cut of roughly 46 percent — to protect its domestic steel industry, while raising tariffs on imports above the quota from 25 percent to 50 percent.

South Korea has been conducting negotiations led by Trade Representative Yeo Han-koo, multilateral trade law official Yoon Chang-hyun and trade law planning division chief Han Ju-sil to minimize the impact on the domestic steel industry.

Earlier, during the European leg of the trip, Kim Yong-beom, the presidential chief of staff for policy at Cheong Wa Dae, told reporters at a local briefing that talks on quota volumes had taken place between South Korea's trade representative and the EU trade commissioner and had made considerable progress. "We cannot disclose details yet, but we expect a better outcome than other countries," he said.

The EU is South Korea's second-largest steel export market, accounting for 3.24 million metric tons of the 28.25 million metric tons exported last year. Industry officials say the pressure would intensify if European market access tightens further at a time when concerns over additional US tariffs persist.

When asked whether South Korea had made any concessions in return, Kim said, "We are not giving the EU anything in particular," adding that Seoul had made clear "very strongly" that the measures constitute a violation of the free trade agreement and that South Korea could pursue retaliatory action.

On the first priority investment project under the Korea-US Strategic Investment Corporation, Kim was cautious, saying the corporation has been launched and procedures are under way. "Whether it will be a single first project or several announced together, I will say more as the situation develops," he said.

On the competition with Germany for Canada's next-generation submarine contract, Kim said South Korea is "waiting with hopeful expectations."

Amid local reports suggesting the contractor announcement could be pushed back to July and speculation that the contract might be split between South Korea and Germany, Kim said Seoul had received no official word and was waiting until the end of June.

He acknowledged that if Canada prioritizes closer cooperation with NATO, it could work against South Korea, but added, "I believe our competitiveness — in the submarine itself and in the industrial package — is superior."

On reconstruction projects in the Middle East, Kim said South Korean companies operating in the region had expressed willingness to participate when opportunities arise. He noted, however, that Iran remains subject to financial and EU sanctions and that negotiations with the United States are stalled, leaving the risk picture unclear. "We are watching the situation," he said.

He added that once risk factors are resolved to a reasonable degree, the government would need to consider ways to participate in the reconstruction effort.

Kim also said the government is weighing when to end the oil price cap and raised the possibility of a further reduction in the ceiling price.

"The end-of-war process and the normalization of the Strait of Hormuz are still dragging on, so we have not been able to make a final decision on termination," he said. "International oil prices are still elevated but have come down compared to before, so there is an incentive to lower the price cap itself."

Kim also said the semiconductor market is expanding rapidly and that South Korea needs to move quickly to secure its position. "Projects already committed to investment should be pushed forward as fast as possible, and given questions about whether that alone is sufficient, I think a new complex may be needed," he said. He added that companies are also actively searching for new sites, having determined that their current landholdings are not enough.

He said details on specific locations or candidate sites would be shared separately at an appropriate time, though his remarks have prompted speculation that the Gwangju-South Jeolla Province area may be under consideration.


oskymoon@heraldcorp.com