U.S.-Korean Trade Pact is a Winner For Both Nations, Obama Says
President Barack Obama is touting a free-trade agreement between the United States and South Korea that includes new provisions for automobile imports.
Friday's agreement has the United States ending its 2.5 percent tariff on Korean cars in five years, instead of immediately or after three years as was previously agreed. In return, South Korea will cut its 8 percent tariff on U.S. cars to 4 percent immediately, instead of dropping the tariff altogether, according to a White House fact sheet.
In what is good news for American automakers, U.S. tariffs on Korean trucks will remain at 25 percent for eight years instead of dropping off immediately. Additionally, each year Ford Motor Co., General Motors Co. and Chrysler Group would be able to send to South Korea 25,000 cars that meet U.S. safety standards. These vehicles would be exempt from in-country standards, reported Automotive News.
Obama said the agreement is a “win-win for both our countries.” The president said the accord will support a level playing field, boost U.S. exports by as much as $11 billion and support at least 70,000 U.S. jobs.
The two countries signed a trade pact in 2007, but the deal was never ratified because of concerns over the U.S. auto and beef industries. Restarting the stalled agreement would create the largest U.S. deal since the North American Free Trade Agreement with Canada and Mexico in 1994, Bloomberg reports. The two countries have more than $68 billion moving between each other.
Last month, Obama and South Korean President Lee Myung Bak couldn't reach a deal during a Seoul summit. Last week, representatives from both countries met in Columbia, Md., to work toward an agreement.
Domestic automakers control around 80 percent of the South Korean market, with Japan taking a sizable chunk of the import market. U.S. market share there has dipped to just 10 percent, industry data suggest.
The U.S. Congress and the South Korean Parliament will need to approve the free-trade pact before it can go into effect. There is no word whether changes will be made to U.S. beef provisions.
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