The EU sent a warning shot across the bow of protectionist France. Brussels refused France’s request to monitor car imports from South Korea. According to the Wall Street Journal, import surveillance could have been Europe’s first step toward blocking or reversing tariff cuts instated by a free trade deal between the EU and Korea. (Read More…)
It looks like Fiat and Chrysler CEO Sergio Marchionne does not want to be head of the European automakers association ACEA much longer. Today, he called for a massive EU rescue package for the ailing European car industry, with coordinated capacity cuts as the centerpiece. He also called for a stop of free trade agreements. “Let the European car industry make its adjustments… This is not the time to embrace free trade,” Marchionne said while Reuters was taking notes.
In many ways it was a strange scene. The president of Korea, speaking in a US factory that builds the replacement to a car that was once imported from Korea. The president of the United States, speaking in a factory that can only competitively build subcompact cars because of a government-ordered “innovative labor practices” that unionized workers were not able to ratify. In many ways, both President Obama and President Lee were visiting the graveyard of their ideals. Which is another way of saying, that this meeting symbolizes a new pragmatism.
American workers may not be getting paid what they once were, but they’re building cars at a profit. Korea may not be exporting as many cars to the US, but it’s putting the squeeze on Japan. Professor Kim Seung-jin of Hankuk University sums up the dynamic in the Korea Times, saying
There is no free lunch in the world… Korea should get into the U.S. market prior to Japan and China. The more we delay the less the advantage. You should know that the world is still living off the American market
This deal probably won’t boost US auto exports to Korea in the way Obama is hoping for, but it’s a reminder that US manufacturing is slowly becoming more competitive… and that our market remains an attractive place to do business. Free trade is necessarily a messy business for politicians, and protectionism might have kept Orion’s wages higher or Aveo production in Korea. But by embracing free trade, these two presidents could walk into Orion, live up to the downsides of free trade, and promise a stronger, more sustainable economic future.