Claiming ‘High Import Barrier’
The US auto industry is strongly demanding the revision of the Korea-US Free Trade Agreement (FTA). Both Korea and the US will start discussion on the revision of the agreement on FTA revision on a full scale on August 22.
According to the automobile industry on August 21, the US American Automotive Policy Council (AAPC) focused on trade deficits with Korea in the automobile industry in a report titled 'significant Trade Deficit' in May. The AAPC is a group of the Big 3 American automakers -- General Motors (GM), Ford and FCA (Fiat-Chrysler).
The AAPC analyzed that the trade deficit of the automobile sector (including parts) last year totaled US$ 22.2 billion which was a major cause of the US’s overall trade deficit with Korea. The AAPC claimed that Korea should improve market accessibility for foreign cars, saying, “Import cars’ market share in the Korean car market swelled to 16% in recent years but the percentage is below the OECD average.”
"In spite of the Korea-US FTA, US automakers are facing barriers that require unnecessary or very special technical specifications," The AAPC said. “The Korea-US FTA specifies regular reviews of regulations, but Korea has not yet done so".
The AAPC wants to expand the application of the US Federal Motor Vehicle Safety Standard (FMVSS), which is limited to 25,000 cars per company per year, and to eliminate additional regulations. "Although a vehicle that passes US safety standards is not subject to Korean standards, this regulation does not include emissions or noises," AAPC said. "Some expensive upgrades are still required to sell US cars in Korea."
In particular, US automakers have the largest number of complaints about emission regulations of the Korean Ministry of Environment. They are not happy about the Korean government’s intensification of greenhouse gas emission standards to 97g per km by 2020. In addition, they regard Korean government’s insistence on addressing product liability and conducting exhaust gas tests of cars running ahead of others as problems.
Next, they pointed their fingers at regulations on colors of direction indicator, vehicle height, inherent radio frequencies (such as tire air pressure), noises and manufacturing defect inspection as problems to solve in the future. They also pointed out that keeping the Korean’s won value low (exchange rate adjustment) was also an important issue.
"Emissions regulations are loose in the United States," an automobile industry official said. "Even if such regulations are relaxed, it does not have much to do with sales of American cars in Korea."