President Barack Obama says he wants to see folks in South Korea driving Fords and Chevys and Chryslers. A trade agreement approved by Congress last night may not separate Korean drivers from their Hyundais and Kias anytime soon.
U.S. exports of beef, machinery and chemicals may all gain from the agreement, according to projections by the U.S. International Trade Commission. Congress gave final approval to the accord yesterday, on the eve of Obama’s meeting at the White House Thursday with South Korea President Lee Myung-bak.
Ford Motor Co., General Motors Co. and Chrysler Group LLC face a steeper challenge. South Korean producers accounted for 92 percent of new-vehicle sales in that nation last year, compared with 1.1 percent for U.S.-made autos, according to data cited by the U.S. trade panel.
The trade agreement’s tariff reductions won’t be enough to draw buyers away from cars made by Hyundai Motor Co. of Seoul and affiliate Kia Motors Corp., according to Bill Visnic, an auto-industry analyst.
“It is not just about the mechanical things like tariffs and duties and taxes,” Visnic of Santa Monica, California-based Edmunds.com, said in an interview. “The populace itself has to be accepting of the notion of imported cars and imported makes. It will probably be decades before you see a significant change in the mix there like we have here?
Hyundai Motor shares rose in Seoul after Congress passed the trade pact. Kia stock was unchanged while parts maker Pyeong Hwa Automotive Co. advanced 3.2 percent.
Obama, who also won congressional approval Thursday of free-trade agreements with Colombia and Panama, has made autos central to his salesmanship for the South Korea accord. Tomorrow, he and Lee plan to visit a GM plant in Lake Orion, Michigan.
”If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers,“ Obama told Congress in a Sept. 8 speech on his job-creation proposals. ”I want to see more products sold around the world stamped with three proud words: ‘Made in America.’
The agreement may increase U.S. exports by as much as $10.9 billion in the first year that it is in full effect, more than the $6.9 billion increase in imports from South Korea, because U.S. tariffs that would be eliminated are already lower, according to the U.S. trade commission.
Under the U.S.-South Korea accord, machinery and equipment exports are projected to increase by as much as $2.9 billion, as are chemicals and plastic products, according to the U.S. commission. Beef exports may increase by as much as $1.8 billion, and pork and poultry may rise by $763 million.
“I don’t think you can judge this free-trade agreement or any free-trade agreement by a single sector,” Susan Schwab, the former U.S. Trade Representative who negotiated the Korea accord, said in an interview. “There will be workers across the United States that are going to benefit.”
(Bloomberg)
