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U.S. - South Korea Fta Test of Bush Administration's Willingness to Fight for U.S

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U.S. - South Korea Fta Test of Bush Administration's Willingness to Fight for U.S U.S. - SOUTH KOREA FTA TEST OF BUSH ADMINISTRATION'S WILLINGNESS TO FIGHT FOR U.S. AUTO INDUSTRY Kildee, Upton, and Levin Lead Bi-Partisan Effort to Urge Bush Administration to Negotiate a Two-Way Street When It Comes to Auto Trade with South Korea WASHINGTON, DC - As the United States' trade delegation prepares to depart for the second round of negotiations of the U.S. - South Korea free trade agreement in Seoul, Michigan U.S. Representatives Dale Kildee (D-Flint), Fred Upton (R-St. Joseph) and Sander Levin (D-Royal Oak), led the effort to open the Korean automotive market to American-made autos in ongoing trade negotiations between the two countries. The three U.S. Representatives organized a bipartisan group of 37 members of the House of Representatives in writing the U.S. Trade Representative (USTR), Susan Schwab, urging her to meaningfully address persistent unfair trade practices by South Korea that have discriminated against the U.S. automotive sector. "Two previous agreements with South Korea have failed to open up their auto market, and the American automotive sector continues to struggle as a result," said U.S. Rep. Kildee. "As has been the case with Chinese currency manipulation, our Administration talks a good game when it comes to supporting American-made manufacturing but fails to confront harmful and unbalanced trade policies head- on. Now is the critical time for the Bush Administration to step up to the plate and support our automakers in these negotiations." "We are sending a loud and clear message that trade with South Korea must be a two-way street for our autos and auto parts," warned U.S. Rep. Levin, a senior member of the House Ways and Means Trade Subcommittee. "The days of unfair trade barriers and regulations that block quality U.S. products from sale in South Korea must end. Too much is at stake for the U.S. automotive sector at this time for the Bush Administration to continue to accept the status quo of unfair trade." While South Korean auto makers enjoy access into the U.S. auto market, American automobile and auto parts manufacturers have been virtually shut out of the Korean market for decades, despite two bilateral auto agreements, known as Memorandums of Understanding (MOUs), signed in the 1990s. South Korea's auto imports account for far less than their auto exports to the United States, representing less than three percent compared to 37 percent exported into the U.S. auto market. Specifically, South Korea sold over 730,000 cars in the U.S., while the U.S. sold only 3,811 cars in South Korea in 2005. South Korea uses a variety of tariff, tax and non-tariff barriers to insulate its domestic manufacturers from foreign competition, while exporting more than 70% of the 3.5 million cars and trucks it builds each year around the world. The Members are urging the Administration to require Korea to first demonstrate that its market is open by reaching and sustaining specific and measurable benchmarks before the U.S. agrees to preferential access for Korea's vehicles by lowering U.S. auto tariffs. A key benchmark would be significant improvement in import market share that is in the range of the average for members of the Organization for Economic Cooperation and Development (OECD). To make this happen, Korea must also undertake a comprehensive dismantling of its longstanding auto non-tariff barriers. On February 2, 2006, USTR and the South Korean Trade Minister, Kim Hyun-Chong, announced their two countries' intention to negotiate a Korea-U.S. free trade agreement. South Korea is the seventh largest U.S. trading partner, and the United States is South Korea's third largest trading partner. The proposed FTA would be the second largest FTA in which the United States is involved, underscoring the necessity to implement and enforce fair market access for American autos in Korea. Below is the full text of the letter: July 6, 2006 The Honorable Susan Schwab Deputy United States Trade Representative 600 17th Street, N.W. Washington, DC 20508 Dear Ambassador Schwab: We are writing to express our strong concerns regarding the U.S.-Korea free trade agreement (FTA) and its impact on the U.S. automotive industry. The U.S.-Korea free trade agreement negotiations will be one of the most important trade negotiations for the U.S. automotive sector. It is one of only a few FTAs the U.S. has negotiated with a major automotive producing and exporting nation, which has actively protected its automotive sector with tariff and non-tariff barriers for decades. Given the deeply frustrating auto trade history with Korea, we are writing to advise you what we believe must be achieved in the negotiations with the Republic of Korea. Korea has developed a world-class automotive industry that is currently the world's fifth largest producer and the third largest exporter. Korea has become a global automotive powerhouse, exporting seven out of every ten vehicles it builds. But while Korea takes advantage of open markets for its exports, it maintains the most closed automotive market of any of the world's major auto-producing countries. Import market share in Korea from all over the world is less than 3% compared to 37% foreign import share in the United States. Korea employs a wide variety of non-tariff barriers that have been successful at keeping Korea insulated from import competition from around the world. In an effort to bring down these non-tariff barriers, the United States negotiated two bilateral auto agreements (MOUs) with Korea in the 1990s to open Korea's auto market to imports. These agreements looked good on paper, but they were unsuccessful in opening the Korean auto market. Given this long, difficult, and disappointing auto trade relationship with Korea, we strongly believe a US-Korean FTA that provides preferential tariff benefits to Korean auto imports must create meaningful and sustained auto market access into Korea. This FTA is the crucial opportunity for the U.S. has to address these auto-trade problems. We believe that the U.S. has to undertake a new approach with Korea. Given our history of two failed auto agreements, Korea must first demonstrate that its market is open by reaching and sustaining specific and measurable benchmarks before the U.S. agrees to preferential access for Korea's vehicles by lowering U.S. auto tariffs. A key benchmark would be significant improvement in import market share that is in the range of the OECD average. To make this happen, Korea will also need to undertake a comprehensive dismantling of its longstanding auto non-tariff barriers. We believe strongly that this type of approach is imperative given Korea's history of one-way automotive trade. The U.S. auto industry is facing a very difficult period in which the jobs of tens of thousands of hard-working Americans are at risk. It is imperative that a FTA with Korea not harm this important U.S. sector and the contributions it makes to the U.S. economy. We are confident that U.S. auto manufacturers can compete effectively in an open and fair Korean auto market, and we look forward to working with you during this process to achieve a truly open Korean automotive market and more balanced automotive trade with Korea. Sincerely, /s Dale E. Kildee Fred Upton Sander M. Levin John Dingell Gene Green Sherrod Brown Jim Oberstar Bill Pascrell Sheila Jackson Lee John Conyers Charles Bass Peter Hoekstra Mark Souder Elijah Cummings Jim Moran Michael McNulty Edolphus Towns William Jefferson Betty McCollum Tammy Baldwin Russ Carnahan Gwen Moore Sam Graves Michael Fitzpatrick Julia Carson Vernon Ehlers Hilda Solis Thaddeus McCotter Barbara Lee Major Owens Carolyn Kilpatrick Steve Buyer Joe Schwarz Eddie Bernice Johnson Sue Myrick Candice Miller Joe Baca Adam Schiff Brian Higgins Walter Jones # # # .
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