Korea rejects Ford claims on closed auto market

The Korean Embassy today rejected Ford Motor Co's contention that its market is closed to import vehicles.

Ford is running advertisements in newspapers in Michigan, Illinois, Ohio and Missouri — as well as Washington, D.C., papers — today calling on the U.S. Trade Representative to negotiate changes to the Korea Free Trade Agreement to boost U.S. auto exports.

"The Korea auto market has continued to open to foreign imports," the Korean Embassy statement said.

The embassy noted that the market share for imported passenger cars in 2008 was 7.2 percent - and that imports have been growing by an averge of 41 percent a year since 2000.

Korean officials also note that imports are generally more expensive vehicles than Korean-built vehicles - and that the import market share by sales value was 19.1 percent in 2008.

The agreement will eliminate the current 8 percent tarrif on imported U.S. vehicles. Korean officials said other provisions will lead to "unprecedented enforcement" to prevent other barriers to U.S. exports.

But Ford notes two previous trade agreements reached in the 1990s failed to do more to boost exports. They also say "non tariff" barriers are the key hurdle to U.S. exports.

They also note that autos account for nearly three quarters of the U.S. trade deficit with Korea.

Working-level discussions on the U.S.-Korea trade agreement are taking place today and tomorrow between Assistant United States Trade Representative Wendy Cutler and Korean Deputy Trade Minister Choi Seok-young Last year, about 7,600 U.S.-built vehicles were purchased in Korea, versus more than 411,000 exported to the U.S.

Through August, the U.S. auto sector trade deficit with Korea was $6.8 billion — up from $4.8 billion over the same period in 2009.

But U.S. auto sector exports to Korea increased to $464 million — more than double the $223 million in the same period in 2009.

The Korea Embassy also notes that General Motors Co. owns Korea's fourth largest automaker, GM-Daewoo. And they note that Japanese and European automakers now export about 80,000 vehicles to Korea annually.