US-Korea Free Trade Agreement Results Darken Trans-Pacific Partnership

Cameron Aubernon
by Cameron Aubernon

Two years after the Obama administration heralded its free trade deal between the United States and South Korea, the latter’s market remains relatively closed to the former’s exports.

The Detroit News reports U.S. Senator Debbie Stabenow of Michigan, chairing her first Finance Committee subcommittee on international trade, proclaimed the free trade agreement fell short of expectations, noting the increasing deficit between the U.S. and South Korea by 50 percent in favor of the latter party, especially regarding automotive exports:

The agreement aimed to open Korea’s markets to American automakers. But agreeing to phase-out tariffs on U.S.-made automobiles hasn’t been enough. Due to non-tariff barriers, Korea remains one of the most closed auto markets in the world.

Ford vice president for international government relations Steve Biegun, also in attendance, said his employer will sell just 7,000 units in South Korea this year after 20 years of attempts to boost sales. Biegun said access to the Korean auto market remains a challenge, citing regulatory challenges.

This comes on the heels of the Trans-Pacific Partnership, which seeks to do with Japan, the United States and 10 other nations what the U.S. had sought with South Korea. Biegun, CEO Mark Fields and Chairman Bill Ford Jr. warn the deal needs increased measures to hinder Japan’s ability to influence the value of the yen, while Stabenow adds there are “outstanding disputes” on agriculture and automobiles along other “very sticky issues” between all parties involved, especially Japan.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • Micronstudent Micronstudent on Aug 04, 2014

    I think many Koreans are worried about the cost of parts, service, and insurance when buying foreign cars. The price of upkeep are easily twice or three times the amount of a comparable domestic vehicle. For the majority of the middle class, this is the greatest barrier to buying imports. For the Koreans who can afford that, they prefer German or British brands over American. Most likely due to their cachet and perceived quality. Until American brands create effective marketing to combat such stigmas, they will have tough time selling cars in Korea, free-trade or not.

    • Safe as milk Safe as milk on Aug 04, 2014

      have to agree. it's been a few years since i've been there but i have had some conversations with my wife's korean family about this subject. koreans for the most part are very pragmatic about cars. they inspection standards are tight and older cars are discouraged. the gas price is about $8/gallon so diesels and stick shifts are pretty common. taxis and rental cars all run on lpg. there is a nationalist bent but foreign cars are a status symbol. german cars are hot thing for the wealthy. to them a small audi or a golf is way cool. for the most part they like american people especially the older folks who still think of general macarthur as a national hero and the japanese as the enemy. but japanese cars are a more common sight than american cars. even a camry is a prestigious car here. my father-in-law called about five years ago and asked if he should replace his eight year old hyundai grandeur with a chrysler because they were on sale. i told him that unless he found a good deal on a small ford, he should just keep buying korean.

  • Robbie Robbie on Aug 04, 2014

    I have trouble seeing which Michigan built vehicle could be competitive in Korea. Our cars are quite different, bigger, and cruder. Stabenow had earlier expected Koreans to start driving F-series trucks through Seoul, and is now surprised they are not buying?

    • See 1 previous
    • Krhodes1 Krhodes1 on Aug 04, 2014

      @bball40dtw GM already has an arm in Korea. Why would they bother to export anything from here? Ford and Chrysler don't, but realistically what do they sell that would appeal to Koreans (or the Japanese) in anything but tiny quantities? There is not a huge, unfulfilled demand for Chrysler 300 HEMI BTRS editions in tiny Asian countries, regardless of whether there is a free trade agreement or not. Ford would be better off selling their German cars there, they are more suited to local tastes and would be more prestigious being European, even with "One Ford". A German Focus or Mondeo is likely to be a better fit from an engine and equipment standpoint than an American one, even if they are "mostly" the same car these days. Americans hardly buy "American" cars these days, why do we expect that anyone else wants them? The American cars and trucks that sell in America are the ones uniquely suited to America, and pretty much nowhere else on the planet. There are very few places where a Camry would sell other than here.

  • Pacificpom2 Pacificpom2 on Aug 04, 2014

    Shades of Ford Australia and Thailand. Drop the tariffs, but increase the car rego/tax/anything else that is a "local government" issue and not tied to imports directly to achieve the same effect at the same time. Doesn't violate any FTA. Thailand put a huge impost on passenger vehicles with an engine capacity greater that 2.5 litres (I think) Blew the anticipated Ford Territory import scheme right out of the water, but didn't stop the import of Thai Fords to Australia. Looks like Ford got done over, again!

  • Freddie Freddie on Aug 04, 2014

    Political advice for South Korea: Eliminate all barriers to imported US cars. It would be painless and completely symbolic; Detroit does not make anything suitable for the Korean market - they might sell a few big SUVs or pick-ups as novelty items. It's also crossed my mind: South Korea is all grown up, a major industrial power, perfectly capable of defending itself from its crazy cousins to the North without the thousands of US troops stationed there.

    • Micronstudent Micronstudent on Aug 05, 2014

      I agree with every word you stated. All barriers should be eliminated. What do Hyundai and Kia have to worry about? The market is already full grown and customers are smart enough to choose whats best. If customers flock to American SUVs, it gives Hyundai and Kia a chance to improve their products and better compete in other markets. The past two governments were so lenient in giving free passes to Hyundai that I think they have become too powerful, stifiling what little competition left in that market. Unless they change their short sighted ways, they will remain as just a value brand and not as innovators. I am afraid by then, they will be easy targets for upcoming Chinese brands. As for North Korea, I think the Korean government knows they can defend on their own. Keeping American bases open (by paying Americans huge defense budget) is a way to bribe such favorable free trade agreements.