South Korean lawmakers question 'failed' tariff deal

South Korean lawmakers on Wednesday questioned the government's recent trade deal with the United States, calling it a "failed" agreement that erodes the country's advantage.

"As a result of this tariff negotiation, the effects of the US-South Korea free trade agreement have disappeared," said Lee In-sun, a member of the opposition People Power Party, during a session of the National Assembly.

Under the original free trade agreement, South Korean exports to the US benefited from near-zero tariffs. However, following the new deal, South Korea now faces the same rate of 15 percent as Japan, which previously enjoyed a 2.5 percent rate, Lee was quoted as saying by the Chosun Biz.

In addition to the blanket tariffs, South Korean automobiles will also be subjected to sector-specific duties of 15 percent — up from zero — bringing them in line with tariffs now applied to products from the European Union and Japan.

Yoon Young-seok, another member of the People Power Party, said the outcome of the negotiations had led South Korea to lose its advantage over competitors completely.

Also on Wednesday, South Korea's HD Hyundai Heavy Industries secured a maintenance, repair and overhaul project for a US Navy cargo ship, which is expected to be completed and delivered in November.

The deal, the first of its kind, came after the South Korean government pledged a $350 billion special strategic industry cooperation fund to support investments for the US, including $150 billion under the "Make America Shipbuilding Great Again" initiative to revive the US shipbuilding industry.

In return, the US has agreed to lower the tariffs on South Korean exports to 15 percent, down from the 25 percent rate previously announced by US President Donald Trump.

While the initiative is expected to increase the influence of South Korean shipbuilders in the US market, some observers expressed concerns about how much progress can be made within the remaining three years of Trump's term, as well as the lack of clarity surrounding the remaining $200 billion in pledged investment beyond the shipbuilding initiative.

Discrepancies in explanations between the two sides regarding key issues — such as revenue distribution from the cooperation fund — have also sparked discussions.

For example, US Secretary of Commerce Howard Lutnick claimed that 90 percent of profits from South Korea's investment in the US will benefit US citizens, a statement that South Korea has disputed.

Hollowing out base

Yoo Myung-hee, a former trade minister and now a professor in the Graduate School of International Studies at Seoul National University, warned that investments in the US could hollow out South Korea's domestic manufacturing base.

"It is more important than ever for the South Korean government to support domestic industry through regulatory reform and enhance labor flexibility," she said, as reported by the Korea JoongAng Daily.

Lee Eun-chang, a research fellow at the Korea Institute for Industrial Economics and Trade, told KBS News, "Given the large scale of the fund, we need to divide the role effectively."

A severe shortage of personnel and facilities in the US also poses a challenge to bilateral cooperation.

In addition, with a summit between South Korean and US leaders approaching, experts have raised concerns that security issues may also be on the agenda. Washington has demanded that Seoul increase its defense budget to 5 percent of GDP.