South Korea to restart Mercosur trade talks in 2018

South Korea’s Prime Minister is set to restart trade talks with the Mercosur trade bloc in the first half of 2018 after meeting the Brazilian president earlier this week, with a key focus on the bloc’s corn and soy exports to South Korea.

South Korean Prime Minister Lee Nak-yon met Brazilian President Michel Temer this week in Brazil during which they discussed the possibilities of a free trade agreement.

An FTA between South Korea and the Mercosur trade bloc – which is made up of Argentina, Brazil, Paraguay and Uruguay – has been attempted several times before, but an agreement has never been reached.

The news comes at a time during a trade dispute between South Korea and the US, after President Trump unilaterally imposed a 30% import tax on solar panels, which led South Korea to raise a complaint with the WTO in January.

However, the US exempted South Korea from steel and aluminium tariffs, which were announced Thursday.

South Korea’s domestic corn production is negligible meaning it needs to import about 10 million mt annually, USDA data shows.

About 40% enters duty free from the US annually under the KORUS FTA, an agreement which is currently being renegotiated after being branded unfair by the Trump administration.

The balance of South Korea’s corn imports come from Brazil, Argentina and Paraguay.

Mercosur, which accounts for around 75% of South America’s GDP, is currently in the process of negotiating a free trade agreement with the European Union.