As part of his first trip to Asia, which begins tomorrow, US President Barack Obama will visit South Korea to push for a wide-ranging free trade agreement (FTA) with the republic that has been sitting around since 2007. But US carmakers are calling for the removal of barriers to US vehicle sales in the country and a “level playing field” ahead of the agreement’s submission to Congress.
The KORUS agreement was signed by representatives from both countries in April 2007 but not submitted to Congress by then-president George W Bush due to opposition by Democrats, unions and automotive manufacturers.
Those groups maintain that, as it stands, the agreement would guarantee access by South Korean automotive companies to the US market without reciprocal assurances that US carmakers could improve their sales there.
US carmakers sold fewer than 7,000 vehicles in South Korea last year, less than 1% of the market, while South Korean carmakers Hyundai and Kia sold more than 53,000 in the US in just the last month. In 2008 alone, Korean auto producers exported more than 600,000 vehicles into the US, while US automakers exported just 10,000 vehicles into South Korea.
Last week US trade representative Ron Kirk told the US Chamber of Commerce that South Korea should “level the playing field” by removing barriers to US automobile sales in order to clear the way for a pending free trade agreement.
Steve Biegun, Ford’s vice president for international government affairs, said: "Ford believes it is absolutely necessary to level the playing field. We appreciate President Obama's commitment to correct the huge imbalance in US-Korean automotive trade before an FTA is considered."
In an editorial published in the Detroit News in October Biegun outlined Ford’s position in more detail and said that the removal of trade barriers and tariffs offer the best business conditions. “These conditions permit the development of a healthy and efficient business, and they produce a customer base that is gainfully employed, upwardly mobile and able to make rational choices about purchases such as vehicles. The US-South Korean Free Trade Agreement does not meet these conditions and shouldn't be approved by Congress.”
Following Mr Obama’s meeting with South Korea’s president Lee Myung-Bak in Washington in June this year he stated: “In the United States there are questions about whether there's sufficient reciprocity with respect to cars. These are all understandable, legitimate issues for negotiation. What I've done is to affirm to President Lee that we want to work constructively with the Republic of Korea in a systematic way to clear some of these barriers that are preventing free trade from occurring between our two countries.”
A similar agreement is currently pending between the European Union and South Korea. In July the European Automobile Manufacturers Association told Automotive Logistics that “important issues are still not solved”. Director of Communications, Sigrid de Vreis said: “There is a lot at stake. There have not been any improvements since March and only last week Korea announced new rules on emissions which will severely limit exports.” (Read more here)