The Hankyoreh | 20 September 2006

U.S. likely to want autos out of trade deal: sources

Auto industry tariffs left out of Seattle negotiations

The U.S. is likely to push for the exclusion of its automobile industry from the ongoing negotiations on a proposed free trade agreement (FTA) with South Korea, trade sources said.

During the third round of FTA talks held in Seattle earlier this month, the U.S. side reportedly categorized the automobile sector as "undefined," meaning it would not discuss lifting tariffs on the industry in the trade deal. Both sides exchanged lists of sectors to be discussed for tariff removal. The automobile sector was not included on the lists, the sources said.

The automobile sector is one of most sensitive areas that the two sides have negotiated. In fact, the sides have formed a contingent working group separate from the main talks in order to review the issue. Currently, the U.S. imposes 2.5 percent tariffs on passenger vehicles imported from South Korea; for trucks, the rate is 25 percent. Seoul negotiators have asked for immediate reduction or removal of the trade barriers.

Kim Jong-hoon, Seoul’s top trade negotiator, was said to have told the National Assembly that the U.S. is not talking about keeping the automobile market closed, but rather making decisions based on the outcome of the contingent working group’s negotiations, sources close to the matter said. Some lawmakers see such a move as an apparent effort by the U.S. to drive a hard bargain in future negotiations, separate sources said.

The U.S. has called for South Korea to ease regulations that could serve as a stumbling block for U.S. carmakers after an FTA takes effect, a demand which has been rejected by Seoul.

"The U.S. has not been interested in adjustment of tariff rates in the first place." a South Korean delegate to the negotiations said, asking not to be named. "Instead, it has demanded an overhaul of automobile taxes, registration requirements and environment-related regulations. [At some point] we may have to yield to their demands or give up our efforts to remove trade barriers in the U.S. automobile sector."