• Aug 20, 2010
Han Duk-soo, the South Korean ambassador to the United States, recently urged the Detroit Chamber of Commerce to embrace increasing automotive imports from his country. Talk about a tough sell. However, the move would be part of a deal that would open South Korea to cars built in America – a market that has been notoriously protected by tariffs and other barriers. Duk-soo said that eliminating America's 2.5 percent tariff on cars built in South Korea would allow his country to do away with its eight percent automotive import tax at the same time.
Without a doubt, Ford, General Motors and Chrysler wouldn't mind diving deeper into a new consumer pool, but according to Representative Sander Levin (D), the U.S.-South Korean Free Trade Agreement needs significant revision before it can provide "meaningful market access" between the two countries. Lawmakers and manufacturers currently say that the agreement isn't adequate enough protection for U.S. exports to keep them from running into additional regulations that may hinder their sale in South Korea.

Meanwhile, Duk-soo says that perception is a misunderstanding, and that while his country's auto market was protected in the past, it's now open to imports. The ambassador even pointed to increasing U.S. auto sales in Korea even despite the hurdles. According to The Detroit News, April U.S. auto sales in the country were four times what they were in 2009, driven largely by the popular Ford Taurus.

[Source: The Detroit News]


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  • 29 Comments
      • 4 Years Ago
      We need to compare the size of the Korean auto market to the U.S. auto market. Just saying tha Korea exported over 400, 000 cars to the U.S. versus importing 7,000 does not tell the whole story. If the US market would be for example is 8 times bigger than ROK's then for the exports of 400,000 cars, the ROK should import 56,000 cars. This is not a perfect example as it does not account for GM sales from Made in Korea cars or Hyundai/Kia sales from Made in USA plants. Nor does it address the fact that the U.S. is a richer nation and purchasing power is greater.

      Nevertheless as long there is a mechanism for the Department of Commerce to re-insert the tariffs in case non-tariff barriers by the ROK hinder U.S. car exports, I think they should go ahead with the FTA.
      • 4 Years Ago
      What a crock of CRAP! "You eliminate your tarrif and we'll eliminate ours?" NA and Korean are hardly equivalent automotive markets.

      Given that Korean manufacturers are already "dumping" their product in North America no thanks to a depressed Korean currency (Won) and low manufacturing wages.

      Korea...How about you increase your standards of living to that of a real western nation and stop manipulating your currency (like China)...then we'll take your free trade promise to heart.
      • 4 Years Ago
      More fun with statistics!

      Out of all the bigger economies of Asia the U.S. actually enjoys the most equitable balance with Korea.

      For example, total bilateral trade with China is $400 billion. About $100B is exports to China and $300B are imports from China. That's an imbalance of 75%

      Total bilateral trade between the U.S. and Japan is $125B. The U.S. sells about $50B to Japan and the Japanese sell about $95B to the U.S. That's an imbalance of 60%

      Now, total bilateral trade between South Korea and the U.S. is about $70B. The U.S. sells about $30B into South Korea and the South Koreans sell about $40B into the U.S. That's an imbalance 57%.

      So, relative to other big Asian economies, the U.S. does better in South Korea than it does in elsewhere. (All statistics from the U.S. Census Bureau)
        • 4 Years Ago
        Great! The U.S. is getting less ****** by S. Korea than the other countries! That makes it right to you I suppose to YOU!
        Who helps you from being over ran by your neighbor?

      • 4 Years Ago
      FlasH,

      You have a good point. Korean sourcing is essential to selling cars in China. This is how GM is doing it. Daewoo is very important to GM in selling cars to China because Daewoo makes components and more importantly kits. The GM plants in China are "integrator" plants. They basically put steel shells around the kits that Daewoo makes.

      At this point Korea makes better quality parts, components and kits than Chinese companies can, which gives GM a comparative advantage over Chinese manufacturers in their home market.

      I'm sure Ford and Chrysler would like free access to Korean kit and component manufacturing capabilities as they sit on the side lines as they see GM expand their Chinese market share.
      • 4 Years Ago
      No more unfair trade practices.
      • 4 Years Ago
      Han shot first.
      • 4 Years Ago
      btw, this is unfair trade to Korean.
      US does not import any Korean beef. However, Korea import US beef.

      "In 2010, S. Korea became the world's third largest U.S. beef importer in 2010. With its strong import growth, South Korea surpassed Japan for the first time to become the largest market for U.S. beef in Asia"
      http://english.peopledaily.com.cn/90001/90777/90851/7068926.html
        • 4 Years Ago
        Also, South Korea was the world's third-largest U.S weapon importer.
        • 4 Years Ago
        I have heard that people driving foreign cars in Korea get many traffic tickets and it stops when they drive Korean-made cars.
        • 4 Years Ago
        @miles
        completely hoax rumor.
        • 4 Years Ago
        I think it's safe to say that both countries have unfair trade practises. Japan has been increasing their auto marketshare in South Korea so I don't see why the US can't do the same.
      • 4 Years Ago
      I love how other countries with higher tariffs want us to eliminate ours before they'll lower theirs.

      S. Korea, even if they bought U.S. vehicles soley, wouldn't meet the numbers that their country already imports here, so what's the benefit for us?

      Oh yeah, more lost jobs and slightly cheaper imported products.

      No thanks, we have enough of that already.
        • 4 Years Ago
        That's dumb, concept. How many did we lose from domestic manufacturers to get those 35k jobs? What's the NET result?

        Oh, right, more jobs lost. I'm with Mike. And screw them - we ought to LIFT our tariff higher!
        • 4 Years Ago
        The only person on here with common sense! How about we drop all our tariffs and put a 15% on all your autos, that should level the playing field! There is no such thing as free trade with a smaller, cheaper country that manipulates every aspect of the game! This is why there are no jobs left in this country and no tax paying middle class! They will NEVER create more jobs here than they will take a way!
        • 4 Years Ago
        @ConceptVBS, Korean branded cars made in US is not considered import and will get have US tariff. Higher tariff -> more work in US to avoid tariff.
        • 4 Years Ago
        That's the one side story. Free trade with Korea give much more benefit to U.S. serivice, finance, agriculture industries.
      • 4 Years Ago
      I live in India and the import duty here is 100 %. Even when I am ready to pay that and buy a Cadillac , Cadillac is not present in India and there are no Cadillac dealerships.
      I have a BMW 335d here which costs about $80,000.

      Even a Honda Accord base pricing is more than $45,000.
      If Cadillac enters India, I would be the first to buy a SRX or a CTS_V>
      • 4 Years Ago
      Yes, the U.S. has a 25% tariff against Korean pick-up trucks... the weird thing is that the Koreans don't make pick-up trucks. The U.S. companies are just paranoid about protecting their cash cows. The Big Three are just being preemptive in making sure that the Koreans don't ever think about making pick-up trucks... hahaha!

      If the Koreans really wanted to, they would just probably have them made in Georgia any how.
      • 4 Years Ago
      The American auto industry tactic of stating odd statistics is a little skewed. Like how they say there are only 8,000 U.S. cars sold in Korea a year and there are 400,000 Korean cars sold in the U.S. and that Korean companies in the U.S. has 7% market share in the U.S. However, what's often forgotten is that GM owns Daewoo and that Daewoo has 9% market share in Korea. That's more than Hyundai/Kia's market share of the U.S. at 7%.

      You can't juggle with absolute numbers like 8k vs. 400k because Korea's market of just under 50 million people will never buy the same volume of cars as a country with almost 300 million people.
        • 4 Years Ago
        Exactly! That's why the U.S. will lose on everything we trade with them. Duh!
      • 4 Years Ago
      No surprises here. Emerging economies will always try to protect domestic industries. Now that South Korea's automobile industry is fairly developed they no longer need the protection. I don't think Hyundai needs the protection anymore.
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