As reported earlier last month, the White House was trying to finalize a deal with South Korea on a long-standing Free Trade Agreement before the G20 summit in Seoul on November 11. However, at the summit, President Obama and South Korea President Lee Myung Bak failed to seal a deal.
Well, all that failing is in the past now because the United States and South Korea today reached an agreement to change automobile provisions, with support from FoMoCo and lawmakers.
Under the terms, the U.S. will end its 2.5% tariff on automobiles in 5 years, instead of immediately or after 3 years as agreed previously. Korea on the other hand will cut its 8 percent tariff on U.S. vehicle imports to 4 percent, instead of eliminating it altogether. The U.S. will keep a 25 percent tariff on truck imports for 8 years and South Korea will allow more imports of U.S. vehicles that meet American regulations and not Korean rules.
“These new provisions provide Ford greater confidence that we will be able to better serve our Korean customers,” Ford CEO Alan Mulally said in a e-mailed statement.
GM also released a statement:
General Motors congratulates U.S. and Korean trade negotiators for successfully addressing many of the concerns related to auto trade in the U.S.-Korea Free Trade Agreement (FTA). We are pleased that the two governments have agreed to delay the phase-out of U.S. vehicle tariffs. This delay will allow the U.S. to assess whether Korea’s market has opened as negotiated before reducing its tariffs. GM is especially pleased that the negotiators agreed to address concerns of American auto manufacturers regarding non-tariff barriers in Korea by increasing the number of vehicles to 25,000 that can be imported into Korea under a small volume exemption. We are also pleased that the two countries agreed to add an auto specific safeguard provision and to accelerate the phase-out of tariffs on electric and extended range electric vehicles. GM will continue to work with the USTR, UAW, and the Korean government to ensure the FTA matches the spirit of fairness that all parties have worked hard to achieve and creates greater access to the Korean auto market.
– By: Omar Rana