Washington – The United States and South Korea signed a new deal considered as the biggest trade deal for more than ten years in what President Barack Obama hopes would increase exports and generate thousands of domestic jobs. Related to the automobile industry, the new deal would be the biggest since the United States entered the North American Free Trade Agreement in 1994 along with Canada and Mexico.
Under the agreement, the United States would impose a 2.5 percent tariff on Korean cars for the next five years, rather than implementing immediate tariff cuts. The deal also paves the way for the export of 25,000 cars to South Korea provided that they comply with US Federal safety requirements.
The deal further allows the United States to continue imposing 25 percent tariff on trucks for eight years and then phase out the imposition on the tenth year. For its part, South Korea would remove the 10 percent tariff it imposes on US trucks immediately.
According to President Barack Obama, the “landmark trade deal” could generate at least 700,000 jobs in the United States as it aims to improve and provide manufacturing jobs in the United States and open Korean service markets to American firms. South Korean President Lee Myung-bak considers it as a win-win situation for the two countries further intensifying their partnership.
The White House had been aiming to forge the deal in November when President Obama visited Seoul for the G-20 Summit but was unable to reach a compromise on matters related to the auto and beef industry. US Trade Representative Ron Kirk and Korean Trade Minister Kim Jong-hoon conducted the talks outside Washington the previous week.
Since 2009, bilateral trade between the United States and South Korea amounted to $66.7 billion which is lower than the $84.7 billion it generated in 2008 due to the economic crisis. With the new agreement, the US automobile sector would greatly benefit. According to the latest figures from South Korean auto industry groups, a total of 449,403 vehicles were shipped to the United States in 2009 while South Korea bought 6,140 American cars, based on vehicle registrations.
According to Cody Lusk, President of the American International Automobile Dealers Association, the new trade agreement will pave the way for the generation of new jobs and products as well as strengthen the alliance of the United States and South Korea. However, Lori Wallach, Director of Public Citizen, the new deal would result to American companies sourcing jobs elsewhere and would like have an impact on Obama’s future political ambitions.
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