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Seoul Seeks to Dodge US' 25% Auto Tariffs after FTA Revisions

Written: 2018-09-04 16:32:41Updated: 2018-09-04 18:11:12

Photo : KBS News

Anchor: The government has revealed revisions to South Korea’s free trade agreement with the U.S. which the two sides agreed on in principle earlier in March. Our Kim Bum-soo has analyzed the revised trade deal, which comes as the U.S. is threatening to impose heavy tariffs on autos and auto parts.

Report: According to the revised free trade agreement between South Korea and the U.S., Washington will retain its 25 percent tariffs on South Korean pickup trucks until 2041.

The Ministry of Trade, Industry and Energy disclosed the revisions on its Web site on Monday, which also include the doubling of South Korea's import cap on U.S. vehicles to 50-thousand a year per manufacturer. 

South Korea’s concessions come as the U.S. is threatening to impose a 25 percent tariff on imported cars and auto parts. Seoul is expected to highlight the swift wrap-up of the talks as well as the concessions in a bid to dodge these potential additional tariffs. 

But dodging the tariffs won’t be that easy according to senior researcher Lee Hang-goo at the Korea Institute for Industrial Economy and Trade.

[Sound bite: Senior researcher Lee Hang-goo (Korean)]
"The high-labor cost auto industry has much contributed in forming the middle class in the U.S. So the U.S. is seeking to protect the industry because if it loses competitiveness it would spread to the entire manufacturing sector."

While renegotiating the North American Free Trade Agreement, the U.S. and Mexico agreed that 75 percent of the value of vehicles sold to the United States would have to come from North American-made parts.

Korean car makers and auto part manufacturers are now concerned they could face a similar fate and see their production costs increase by a large margin. 
Kim Bum-soo, KBS World Radio News.

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