It’s not exactly a new Free Trade Agreement just yet, but the United States and the Republic of Korea announced that they have reached an agreement in principle on the general terms of amendments and modifications to the United States-Republic of Korea Free Trade Agreement (KORUS FTA). The nations have also agreed on terms for a country exemption for South Korea from tariffs imposed on steel imports under Section 232 of the Trade Expansion Act of 1962 under the proclamation signed by President Donald Trump earlier this month.

Negotiators are finalizing the terms of the KORUS FTA negotiations, which are subject to ratification by the legislative bodies of both nations. In the US, this includes a 60-day consultation period with Congress.

The revised agreement addresses issues related to investment, tariffs, trade in automobiles, and trade remedies. Progress was also made in the areas of pharmaceuticals, customs, and textiles, according to a statement from US Trade Representative Robert Lighthizer.

The arrangement with respect to steel imports is expected to take effect on May 1, 2018.

“The Republic of Korea is an important ally and key trading partner,” said Lighthizer. “Improving KORUS by rebalancing our trade and reducing the trade deficit will strengthen our national security relationship.”

Since KORUS went into effect in 2012, the US trade deficit in goods with South Korea increased by over 73 percent from $13.2 billion to $22.9 billion in 2017, while the overall deficit increased by 70 percent from $6.3 billion to $10.7 billion. Lighthizer said the negotiations secured changes that will reduce the trade deficit. The KORUS negotiations began in July 2017.

Among the KORUS amendments negotiated by the two parties, South Korea will extend the phase out of the 25-percent tariff on trucks until 2041, or an additional 20 years under current provisions.

The USTR says exports of US motor vehicles to South Korea will be improved by allowing 50,000 cars per manufacturer per year to meet US safety standards in lieu of South Korean standards and enter the South Korean market without further modification. US vehicle exports will be able to show compliance with Korea’s emission standards using the same tests they conduct to show compliance with US regulations, without additional testing for the South Korean market. South Korea will recognize US standards for auto parts necessary to service US vehicles.

South Korea will also expand the amount of eco-credits available to help meet fuel economy and greenhouse gas requirements under current regulations. Fuel economy targets in future regulations will be set taking US regulations into account.

South Korea also committed to streamline its customs procedures with regard to verification of origin of exports and will amend its pricing schemes for pharmaceuticals imports to ensure that US products receive non-discriminatory treatment.

The US Department of the Treasury is in talks with South Korea’s Ministry of Strategy and Finance to finalize an agreement that would prohibit competitive devaluation and exchange rate manipulation.

On the steel and  aluminum tariffs, South Korean imports of steel products into the United States will instead be subject to a product-specific quota equivalent to 70% of the average annual import volume of such products during the period of 2015 to 2017, resulting in a reduction in South Korean steel shipments to the United States.