Wall Street Journal reports that the US auto industry has gained a strong concession in the terms of this FTA. The revised pact allows the U.S. five years to phase out a 2.5% tariff it levies on South Korean-built cars, rather than cutting the tariff immediately, as provided for in the original agreement struck in 2007.
After inconclusive negotiations between US and South Korea during last month’s G-20 agenda, North Korea’s recent attack on South Korean territory may have propelled the negotiation teams back to the table. In January, expect some bi-partisan drama as Congress reconvenes, spoiling for a fight before ultimately passing the deal at the recommendation of Ford Motors and the US Chamber of Commerce.
Seoul would immediately cut its tariff on U.S. auto imports in half, to 4%. A 25% tariff levied by the U.S. on South Korean truck imports would remain in place for eight years, while the corresponding South Korean tariff on U.S. trucks, 10%, would be cut immediately.
Overall, U.S. businesses that stand to benefit from a South Korea free-trade agreement include financial services, agriculture and manufacturers of big-ticket capital goods.
Speaking of food, reactions from Montana lawmakers tell how the beef industry’s desired concessions by South Korea didn’t get as far as those of automakers. Meanwhile, as import food prices fall for Koreans once the FTA takes effect, US citrus growers appear to be first in line for agriculture export gains.
Think about the potential for frozen juice and dried fruit, let alone fresh produce and nuts. Western US growers will get to the market first, so expect agriculture trade associations in that region to mobilize with trade shows and matchmaking trips.