KORUS FTA's auto trade clauses more favorable than Korea-EU deal: USTR

By Hwang Doo-hyong
WASHINGTON, Oct. 19 (Yonhap) -- Clauses on auto trade contained in a pending free
trade deal (FTA) between the United States and South Korea are more favorable
than those in a similar deal that Seoul initialed with the European Union, a
report by the U.S. Trade Representative (USTR) said Monday.
An imbalance in auto trade and restricted shipments of U.S. beef are two key
concerns that Washington wants to address in its review of the KORUS FTA. The
deal, signed in 2007, has yet to be ratified by the two nation's respective
legislatures as the Democrat-controlled Congress in the U.S. is concerned about a
backlash from trade unions over possible job cuts amid the worst recession in
decades.
South Korean and U.S. officials have said they favor side agreements to address
those concerns rather than revising the text of the deal itself.
The USTR's analysis of the auto trade clauses in the Korea-EU FTA, posted on its
Web site, shows that unlike the EU, the U.S. maintains the right to revoke tariff
exemptions on Korean cars.
"In particular, KORUS has a specific enforcement mechanism that includes the
ability to snap back U.S. tariffs on Korean cars if Korea takes measures that
impair the Agreement's expected benefits," the report said. "Korea also committed
to eliminate many aspects of the discriminatory effect of its current automotive
tax system. The Korea-EU FTA does not allow for a snap back remedy, and with
respect to taxes simply affirms that any modifications to Korean autos taxes will
be made on an MFN (most favored nation)basis."
On the issue of unique Korean automotive safety standards, the USTR says, "In
KORUS, the United States obtained an exemption that allows each U.S. automaker to
sell up to 6,500 vehicles a year in Korea built to U.S. safety standards (and
which do not need to be modified for Korea)."
"Instead of such an exemption, the Korea-EU FTA contains provisions committing
Korea to harmonize some of its standards to European standards over time."
On passenger car tariffs, both the EU and Korea will eliminate tariffs in three
or five years, depending on engine size, while in the KORUS deal, Korea's eight
percent auto tariff and the 2.5 percent tariff on smalls cars in the U.S. would
both be eliminated immediately, while those on large cars with an engine
displacement of 3000cc or greater would be removed over three years.
On truck tariffs, the KORUS FTA stipulates that Korea will immediately eliminate
its 10 percent tariff, while the U.S. will phase out its 25 percent tariff over
ten years.
In the Korea-EU FTA, Korea will eliminate tariffs on most trucks immediately, and
the EU will eliminate a 22 percent truck tariff over 3 or 5 years, depending on
the type of vehicle.
USTR spokeswoman Carol Guthrie said in a statement that her office will closely
look at the Korea-EU deal in its review of the KORUS FTA.
"The recently initialed EU-Korea FTA has similarities to, and differences from,
the KORUS FTA," she said. "We look forward to engaging with Korea and the EU to
fully understand the agreement and its implications for the United States. USTR
will carefully consider this agreement as it continues its review of the KORUS
FTA."
The analysis comes amid concerns expressed by proponents of an early ratification
of the KORUS FTA that U.S. products will lose competitiveness in the South Korean
market due to the Asian nation actively seeking free trade deals with China,
Japan, India and several other countries.
hdh@yna.co.kr
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