The United States and South Korea agreed to revise their six-year-old trade pact with a side deal to deter competitive currency devaluation by Seoul and with concessions for U.S. autos and pharmaceutical companies, Trump administration officials said on Tuesday. They told reporters that the deal includes provisions outlined by South Korean officials on Monday, including a 20-year extension of the 25 percent U.S. tariff on pickup trucks and a doubling of the Korean import cap on autos that meet U.S. specifications to 50,000 per manufacturer per year. The agreement, cobbled together quickly with only a few rounds of negotiations under Trump's threat of withdrawal, will include a side letter that requires South Korea to provide increased transparency of its foreign exchange interventions, with commitments to avoid won devaluations for competitive purposes. The currency deal, the final details of which are still being negotiated between the U.S. Treasury and South Korea's Ministry of Strategy and Finance, is considered a side letter that will not be enforceable with trade sanctions. Many U.S. lawmakers, particularly Democrats, had opposed the 2015 Trans-Pacific Partnership trade deal because it had a similar currency manipulation side agreement that could not be enforced. Nonetheless, the revised U.S.-South Korean Free Trade Agreement, known as KORUS. U.S. officials said the trade deal would go into force with a currency side agreement and would not require congressional approval. When asked whether the forex agreement would ensure South Korea is not labeled a manipulator in the U.S. Treasury’s next currency report, due April 15, officials declined to comment, saying such assessments will be made according to Treasury procedures.

Improving foreign exchange policy transparency would mean disclosing how much money is spent to curb currency market volatility, a South Korean finance ministry official said. “It’s about time” South Korea disclosed FX intervention details, the official added, speaking on condition of anonymity because of the issue’s sensitivity. South Korea’s central bank is often suspected of buying or selling dollars to stem sharp fluctuations in the won, but there are no official figures on how much is spent on such “smoothing operations.” While Seoul says interventions are limited to smoothing operations, the practice has drawn criticism that it may devalue the currency to boost exporters’ competitiveness. Earlier in March, South Korean government officials said plans to disclose details of currency market intervention are under review. South Korea has been kept on a Treasury currency "monitoring list" because of its large global current account surplus and U.S. trade surplus. The Treasury’s October report urged Korea to enhance the transparency of its exchange-rate intervention.

Officials confirmed that South Korea agreed to cut its steel exports to the United States by about 30 percent, allowing the rest to be excluded from steel tariffs. Korean aluminum producers remain subject to a 10 percent U.S. tariff. Other countries must agree to similar quotas to escape tariffs, but the size of the limits will vary. The United States is negotiating with Canada, Mexico, Brazil, the European Union, Australia, and Argentina. One official said it was "not a one-size-fits-all" approach and added that the South Korean quota was agreed because of its "unique" position in steel exports. South Korea imports and processes significant amounts of Chinese-made steel, much of which is under anti-dumping and anti-subsidy tariffs. “What will be the same for any country that is out from under the Section 232 tariff, as with Korea, is that there will be a hard quota,” the official added. South Korea also agreed to amend a government health program that pays premium prices to domestic drug companies to ensure a level playing field for U.S. pharmaceutical producers, U.S. officials said.

A file photo shows rolled steel at a Hyundai Steel plant in Dangjin, about 130 km (81 miles) southwest of Seoul, June 15, 2011 (REUTERS/Lee Jae-Won).

In addition to increased access for American vehicles that meet U.S.—but not necessarily South Korean—safety standards, U.S. officials said they secured reductions in non-tariff barriers to U.S. vehicle sales, including elimination of duplicate environmental testing requirements and recognition of U.S. replacement-parts standards. Officials said extending the phase-out period for U.S. pickup truck tariffs to 2041 would help ensure production does not migrate to South Korea, as some production moved to Mexico after the North American Free Trade Agreement eliminated the tariff.

Reporting by Cynthia Kim and Shin-hyung Lee; Editing by James Dalgleish and Sandra Maler.