SEOUL, Mar. 27 (Korea Bizwire) — South Korea’s troubled automobile industry faces yet another blow amid growing speculation that the government might trade the sector in for favorable steel tariffs.
Speaking to the press at Incheon Airport, South Korean trade minister Kim Hyun-jong. who had just returned from Washington, said, “Understanding on the bilateral FTA and steel issues has been reached in principle.”
While acknowledging that there are still ‘technical matters’ that need to be straightened out, Kim assured a red line on farm goods has been defended at the negotiation table.
The South Korean auto industry is feeling nervous following the announcement, as the agricultural and automobile sectors have been seen as bargaining chips in the negotiation of trade deals.
Experts are united in estimating that some type of compromise in the auto industry is inevitable, as car exports accounted for over 70 percent of South Korea’s trade surplus with the U.S. last year.
Some of the most likely moves include tariffs on South Korean pickup trucks sold in the U.S., and less strict safety and environmental standards for imported cars in the South Korean market, which could hurt carmakers like Hyundai Motor, which has been developing pickup trucks targeting the U.S. market.
Last January, Kyung Soo Lee, the president and CEO of Hyundai Motor America, said the American unit received approval from headquarters to go ahead with the development of pickup trucks.
Reports so far suggest the South Korean car industry has avoided the worst-case scenario for the Korea-U.S. FTA renegotiations, as the requirement to use over 50 percent of automobile parts – one of the most feared clauses in the trade deal – has reportedly been dropped.
The government is still expected to face criticism, however, for taking a compromising position on the car manufacturers.
“The damage can only be estimated in detail after the content of the free trade agreement with the U.S. has been revealed. If it turns out more compromises than expected were made, the South Korean auto industry, which has already been hit by a years-long slump, will be shaken upside down,” an industry source said.
Hyunsu Yim (firstname.lastname@example.org)