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Senators demand US retain tariff on S Korean autos even after FTA

Wednesday August 23, 2006

Senators Demand Us Retain Tariff On Skorean Autos Even After FTA

WASHINGTON, Aug 23 Asia Pulse — Two U.S. senators proposed a bill demanding the United States retain the existing import tariff on South Korean automobiles regardless of a future trade agreement as a way to pry open the Asian trade partner’s market.

Senators Debbie Stabenow and Carl Levin, both Democrats from Michigan, introduced the "South Korean Fair Trade Act" dated August 3 that they said is intended to "level the playing field" until South Korea meets their stated conditions.

The bill would require the U.S. to keep the current 2.5 per cent import duties under the Harmonized Tariff Schedule on South Korean vehicles until at least 20 per cent of motor vehicles sold in South Korea each year are from foreign countries.

Last year, 2.7 per cent of the vehicles sold in South Korea were imports.

It also says the proposed legislation would supercede "any other provision of law," referring to free trade agreements (FTAs).

South Korea and the U.S. are negotiating an FTA they aim to conclude by the end of this year, and the auto sector is one of the key interests and demands for the U.S. side. Seoul levies an 8 per cent tariff on American car imports and is often accused of discriminatory regulations that add taxes depending on engine sizes.

The bill claims South Korea maintains bias in its markets, campaigning with the public not to buy foreign cars.

The bill has been referred to the Senate Finance Committee.

Diplomatic sources here said South Korean officials talked with congressional and administration officials about the proposed legislation after it was submitted.

One source, who closely monitors South Korea-U.S. FTA negotiations, said the bill is not gaining support within the administration because it goes against its policy of free and open trade.

"The position of the U.S. administration is clearly different from that of such views of the Congress," he said, speaking on condition of anonymity. "People in the administration think that this is not a positive setting at all, that it runs contrary to the principle of free trade. But they don’t want to publicly criticize the Congress."

Another source, also asking not to be named, suggested the legislation may have been politically motivated as well, targeting the constituencies in Michigan, the home of America’s auto industry, ahead of the congressional elections in November.

"The language of the proposed legislation reflects much of what American auto manufacturers have said in earlier public hearings on the FTA with South Korea," he said.


 source: Asia Pulse