S. Korea, U.S. agree to eliminate and phase out tariffs on autos

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Thread: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

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    GMI Staff Member Premium Member nadepalma's Avatar
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    S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    I didn't see this anywhere -- forgive me if it's a repost, but thought it was interesting news.

    SOURCE: http://www.detnews.com/apps/pbcs.dll...93/1148/AUTO01

    S. Korea, U.S. agree to eliminate and phase out tariffs on autos
    Kelly Olsen / Associated Press

    SEOUL, South Korea -- The United States and South Korea concluded a landmark free trade agreement Monday, officials said, culminating 10 months of negotiations in a final week of intense haggling that just beat a key U.S. legislative deadline.

    The deal, which requires approval by lawmakers in both countries, is the biggest for the United States since the North American Free Trade Agreement, which took effect in 1994. It is the largest ever for South Korea.

    South Korea and the U.S. agreed to eliminate and lower tariffs and other trade barriers in a wide range of industrial goods and services, including financial services. The agreement also covered sectors such as e-commerce.

    "The free trade agreement we are announcing today is a historic accomplishment," Deputy U.S. Trade Representative Karan Bhatia told reporters. "It is an agreement for the 21st century."

    Negotiations began last June in Washington amid much fanfare. Both sides strongly advocated a deal, saying it would boost economic growth in two countries, which already do more than $75 billion (56 billion euros) in trade a year.

    But disputes in areas such as automobiles and agriculture slowed progress, forcing a final round of intense talks in Seoul since last Monday.

    South Korea, under pressure from farmers who were worried that eliminating protections for rice would destroy the domestic industry, succeeded in keeping the staple food out of the deal.

    But Seoul agreed to lower tariffs on other agricultural goods, including American oranges.

    The two sides also agreed to eliminate and phase out tariffs on automobiles, with South Korea also agreeing to change its auto tax structure for larger vehicles, which Washington claimed was discriminatory.

    South Korean automakers sold 730,863 vehicles in the United States in 2005, while American auto companies sold only 5,795 in South Korea, according to Commerce Department figures.


    The issue of American beef imports, absent from South Korean markets for more than three years after mad cow disease was discovered in the U.S. in 2003, was not an issue in the free trade talks. Still, Washington apparently came away with expectations it may be on the way toward resolution.

    Assistant U.S. Trade Representative Wendy Cutler, the chief U.S. negotiator for the talks, said an expected certification of U.S. beef next month as safe to eat by the World Organization for Animal Health will pave the way.

    "When this classification comes out we look to Korea (South) Korea to promptly reopen its market to American beef," Cutler said.

    In the final round of talks in Seoul, South Korean Trade Minister Kim Hyun-chong, Bhatia and their subordinates held eight days of marathon talks, sometimes going all night, to clinch the deal.

    The negotiators were under pressure because U.S. President George W. Bush must notify Congress that he plans to sign a trade agreement 90 days before his special Trade Promotion Authority expires July 1, meaning the agreement had to be concluded by April 1.

    That so-called "fast track" authority allows Congress to ratify or reject, but not modify, trade deals negotiated by the White House.

    Shortly after midnight Monday in Washington, the White House released the text of a letter from Bush to congressional leaders, dated April 1, stating his intention to enter into a free trade agreement with South Korea.

    He said the agreement "will generate export opportunities for U.S. farmers, ranchers, manufacturers, and service suppliers, promote economic growth and the creation of better paying jobs in the United States, and help American consumers save money while offering them greater choices."

    But South Korean labor and farm groups have denounced the deal, demonstrating on the streets of the country, especially the capital Seoul, saying an influx of U.S. imports will cost jobs and harm livelihoods.

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    Last edited by nadepalma; 04-02-2007 at 10:31 AM.
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    GMI Staff Member Premium Member nadepalma's Avatar
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    I know that some folks don't like FTA agreements, but if it helps us sell anything more in Korea (Seems the agreemenet goes well beyong automobiles and will help the agricultural economy as well), I'd be for it.

    Nevertheless,the flip side to this is that GM can now import GMDAT products at a lower cost as well. I don't know how much longer GM will be importing products from Korea for Chevy (and Pontiac in Canada) since the rumor was that the next-gen Aveo might be built in Mexico alongside the next-gen Delta II products. But certainly its not bad news if some of our US sourced products make it to Korea (could we see the HHR, Camaro, next-gen Imapla, etc be sold in South Korea?).
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    while American auto companies sold only 5,795 in South Korea,
    So would GM sales in Korea count as foreign, since it's GM, or domestic since it's Daewoo? I wonder how much Hyundai and Kia will be able to lower their prices now.
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    GMI Staff Member Premium Member nadepalma's Avatar
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by JVal14
    So would GM sales in Korea count as foreign, since it's GM, or domestic since it's Daewoo? I wonder how much Hyundai and Kia will be able to lower their prices now.
    No, they aren't including GMDAT products in that figure -- but probably North American sourced products. I don't know what else GM sells over there in South Korea, but I do know they have a Sky rebadge they sell and I'm pretty sure they sell the Vette too. There was supposed to be a foray by Caddy as well.

    But remember that Ford and Chrysler probably contribute to that number as well -- but I have no clue what they sell there if much at all.
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Nice find, nadepalma. I just hope that South Korea's agreement to change the tax structure that discriminated against larger vehicles helps more than the elimination of tariffs on imported vehicles from South Korea will hurt US jobs. Something tells me that the US automakers are in full support of this (particularly GM) - plus Hyundai will see big benefits, since the rising value of Korea's currency against the dollar have eliminated much of their pricing advantage. However I am guessing that the workers will not look kindly upon this, since it's probably going to lead to fewer US manufacturing jobs.
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Oh good now we can counter balance those 730,863 vehicles by sending more cigarettes and hamburgers to korea............

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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    This is definitely good news!

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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by 69Firebird400
    ...However I am guessing that the workers will not look kindly upon this, since it's probably going to lead to fewer US manufacturing jobs.
    It's interesting how that perception exists on both sides of the deal.

    "But South Korean labor and farm groups have denounced the deal, demonstrating on the streets of the country, especially the capital Seoul, saying an influx of U.S. imports will cost jobs and harm livelihoods."

    Both sides can't be right.

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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by hunchman
    Oh good now we can counter balance those 730,863 vehicles by sending more cigarettes and hamburgers to korea............
    American cars, and other American products, have a much better chance of being sold in Korea, thanks to the relaxed tax rates. Korea is not Japan; different culture, different people.
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by biggerj
    It's interesting how that perception exists on both sides of the deal.

    "But South Korean labor and farm groups have denounced the deal, demonstrating on the streets of the country, especially the capital Seoul, saying an influx of U.S. imports will cost jobs and harm livelihoods."

    Both sides can't be right.
    That is interesting. It sounds like this is less than a sure thing, since it would have to be approved not only by a Democrat-controlled congress that's not necessarily friendly to FTAs, but also apparently some South Korean opposition. Hmm.
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    but will this really increase the amount of U.S. goods sold over there by much? i'd be interested to see how loyal to domestic goods other countries are versus the U.S. it's obvious that we absolutely devour foreign goods, i'd like to see how the trend is in other countries.
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by biggerj
    It's interesting how that perception exists on both sides of the deal.

    "But South Korean labor and farm groups have denounced the deal, demonstrating on the streets of the country, especially the capital Seoul, saying an influx of U.S. imports will cost jobs and harm livelihoods."

    Both sides can't be right.
    Sure they can. Our cheap food products put Korean farmers out of business, and thier cheap cars cause American auto plants to shut down. Provided there's something resembling a balance in the amount of trade, the result is cheaper prices for "stuff", overall, in both countries, and not net job loss (although individual people would be laid off, balanced by gains in other sectors).

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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Great news for some US companies, like GM. The profit on the Aveo will go up. Samsung will also see a huge benefit with all of the electronics they sell here. The "farmers" who will benefit the most from this is ADM among others.

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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    WOW Gm is partly behind pushing this with legislatures I am sure. If they are to build a Mini, Aveo and new Cobalt there this will help in reducing the over all cost. If this goes through GM will really profit from this. I hope it does!!!!
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    Re: S. Korea, U.S. agree to eliminate and phase out tariffs on autos

    Quote Originally Posted by Geotpf
    Sure they can. Our cheap food products put Korean farmers out of business, and thier cheap cars cause American auto plants to shut down. Provided there's something resembling a balance in the amount of trade, the result is cheaper prices for "stuff", overall, in both countries, and not net job loss (although individual people would be laid off, balanced by gains in other sectors).
    Good post. I heard an interview of Congressman Rangle of NY today. He's chairman of the House Ways and Means Committee. He said the Democrats wanted our trade reps to start considering and working for our workers in addition to our corporations.

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