From AAIA Capital Report

The United States and Korea reached a supplemental deal on Dec. 3 to resolve outstanding issues from the U.S.-Korea free trade agreement. Among the agreements that were reached, the U.S. Trade Representative announced that significant concessions were achieved on autos, which will allow U.S. manufacturers of cars and trucks to “gain more access to the Korean market and a level playing field to take advantage of that access.” 

Specifically, the new agreement retains the safeguards which would permit the United States to reimpose or “snap back” as much as $200 million in U.S. tariffs to pre-agreement levels if the U.S. auto industry is materially affected by Korean violations of the agreement. However, the new agreement adds provisions for the special auto safeguard by extending its coverage to safety and environmental standards, as well as eliminating procedural steps and speeding up application of the safeguard.

In addition to the general 2007 snap back provision, the 2010 supplemental agreement:

• Makes the provision available to the U.S. auto industry 10 years beyond the full elimination of tariffs for each Korean product, unlike the general safeguard provision under which the protection ended at the point of complete elimination of the tariff on a particular product.

• Eliminates the requirement that the United States offer Korea tariff reductions or compensation for up to two years after the safeguard is applied, in contrast to the general safeguard.

• The “snap back” safeguard can be used more than once if more than one surge causes damage to U.S. industry.

• The “snap back” safeguard can be applied to a particular product for as long as four years, instead of the three years of the general safeguard.

• Eliminates the requirement that the U.S. progressively “re-lower” tariffs while the special auto safeguard is applied.

The Automotive Aftermarket Industry Association (AAIA) congratulated President Obama, U.S. Trade Representative Ron Kirk and the U.S. negotiating team, for successfully completing the U.S.-Korea Free Trade Agreement (FTA). AAIA noted that it boosts growth opportunities for companies and workers in the U.S. aftermarket and other sectors.
 
“U.S. negotiators worked tirelessly to ensure the reciprocal benefits of the accord, which is great for our world-class aftermarket companies, who compete exceptionally well, whenever tariffs and other trade barriers fall,” said Kathleen Schmatz, AAIA president and CEO.
 
“AAIA supports President Obama’s National Export Initiative (NEI) goal of doubling U.S. exports over five years, and the increased U.S. access to Korea’s booming vehicle parts markets, as well as completion of the Anti-Counterfeiting Trade Agreement, can both prove helpful in meeting that goal,” said Schmatz.
 
“Congress and the administration should now redouble U.S. efforts to conclude the Doha Round of the World Trade Organization (WTO) trade talks. Vehicle ownership is growing worldwide, and WTO tariff cuts and other market opening measures could spur global consumer demand for quality aftermarket products made by American workers,” Schmatz said.