Bridges Weekly Trade News DigestVolume 13Number 39 • 11th November 2009

US Wants More Access to South Korean Auto Market: USTR


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Washington’s top trade official insisted last week that the United States is “not standing still” on a free trade pact with South Korea that has sat un-ratified in the US Senate for over two years. But the White House wants Seoul to further open its market to US auto imports before lawmakers vote on the deal, the US trade representative added.

“Our market is open to Korean autos. All we are asking for is our own auto companies to be able to compete on a level playing field in the Korean market,” USTR Ron Kirk said in a speech to the US-Korea Business Council in Washington on 5 November. “As all of you know, the American auto industry is working through a period of difficult transition,” he added.

As it now stands, the deal would immediately cut South Korea’s eight percent tariffs on imports of US cars, while the US would be allowed three years to gradually reduce its 2.5 percent duty on South Korean auto imports. Washington would also be required to phase out a 25 percent tariff on imports of pick-up trucks over the next ten years.

US automakers are not happy with this arrangement.

“The FTA does not allow for free trade in autos and leaves in place a complex array and culture of non-tariff measures that block our access to this important market,” the Ford Motor Company said in a statement submitted to the USTR’s office in September.

Kirk said that Washington is also uncertain about the sections of the FTA concerning beef exports and non-tariff barriers to trade.

Observers say that if the deal is not approved by June of next year, mid-term elections the following November would likely push the trade agreement off of Congress’ agenda until at least 2011. And if the auto issue is addressed, some say, trade officials would most likely create a side agreement to the existing text, instead of re-opening the deal that has already been negotiated.

But if it gets through, the deal would be a boon for US exporters. A 2007 report from the US International Trade Commission concluded that the pact could boost US exports by more than US$ 10 billion annually. South Korea is the US’ seventh-largest trading partner, and bilateral trade in goods and services totalled roughly US$ 83 billion last year.

US President Barack Obama will meet with Korean President Lee Myung-Bak on a stop in South Korea during a 10-day tour through Asia later this month. The two heads of state will also meet in Singapore for the Asia-Pacific Economic Cooperation summit. The bilateral FTA is expected to be a focal point of their exchanges.

Washington and Seoul wrapped up negotiations in April 2007 (see Bridges Weekly, 4 April 2007, http://ictsd.net/i/news/bridgesweekly/7581/) and the two countries’ heads of state signed the deal three months later. But the pact has languished in Congress ever since, largely thanks to the concerns of the auto industry.

But pressure for Washington to enact the deal has mounted since the European Union signed its own free trade pact with South Korea last month (see Bridges Weekly, 21 October 2009, http://ictsd.net/i/news/bridgesweekly/57424/).

More information

The full text of Kirk’s speech is available here: http://www.ustr.gov/about-us/press-office/speeches/transcripts/2009/november/remarks-ambassador-ron-kirk-us-korea-busine

ICTSD reporting; “USTR Kirk says Skouras trade pact needs new auto deal,” REUTERS, 5 November 2009.

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