Korea Times | 26 October 2006
US Offers to Lift Tariffs on All Industrial Goods
By Kim Yon-se
SOGWIPO, Cheju — The United States Thursday proposed the complete abolition of tariffs on all industrial goods, including automobiles, while South Korea insisted on maintaining some.
On the fourth day of negotiations for a free trade agreement here, officials said that the two sides differed over tariff eliminations, despite their agreement on the categorization of goods into five groups by the period of tariff elimination. The categories range from immediately, three years, five years, 10 years to undefined.
Washington’s proposal is seen as a gambit to press Korea in the stalemated negotiations, taking advantage of its superior industrial power, according to analysts.
“The U.S. side told Korean negotiators that it is ready to eliminate tariffs on all industrial goods, including cars,” a government official said. This means that during the ongoing talks, U.S. will likely submit a revised proposal that will include the elimination of an average 2.5- percent tariff on automobiles and a 20-percent tariff on pickups.
Korea maintains an 8-percent tariff on imported automobiles and a tax system that charges more for cars with bigger engine displacements.
U.S. Trade Representative Susan Schwab recently had told a radio broadcasting company in California that the U.S. will not continue its FTA talks if Korea does not remove trade barriers in the automobile sector.
According to the broadcaster, Schwab said Korea is limiting U.S. car imports by levying taxes in proportion to engine capacity.
He argued that non-tariff trade barriers should be lifted.
A Hyundai official said an FTA with the U.S. would not be beneficial to his company’s sales there. “The average price of exported cars will be lowered by only about 100,000 won ($104) even if the tariff burden is eased.
And the Sonata, produced in Alabama, is irrelevant with an FTA.”