US-Korea FTA Update June 2007

Some of the readers of this Blog may be following the US-Korea Free Trade Agreement (KFTA).

My interest is in the Auto section of the agreement.

This last week in US International Trade Commission (ITC) meetings over the KFTA, both sides spoke. This included the Korean Ambassador and Congress opposed to the current agreement.

My friends in the biz tell me the Mich. reps are and will remain adamantly apposed to any agreement, which is no surprise. Sander Levin (Dem. Mich.) has made the same argument for years. His recent points of contention, no different.

As of yet, autos are not part of the revision, perhaps because there is not a lot of to change. Moreover, the Mich. reps don't really give specifics just continue to stress how few US OEM cars make it into K. Again, the same argument they have made for years,

The Mich. reps oppose the agreement more on principle than specifics...

Sander Levin and the US OEM (like Ford) content there are barriers to imports. There are huge VAT, nevertheless, cars 1600cc and below have few restrictions which is what the Big 3 lobbied for and got in the previous agreement. Wendy Cutler once pointed out in a meeting I attended how adamant the Big 3 were in their low cc demands, which they got!!

Essentially, no one in K wants a low end Fords, GM etc... they want Honda, Lexus, Audi, MB, BMW that are doing okay even with the 8 VAT.

BTW My understanding of the agreement is that following the ratification of the FTA, the VAT will be restructured. It's vague how, etc.

So far, on the K side, they may want to restrict American-made Japanese OEM products being imported into K without some tariff or VAT.

DS