American car imports soar on U.S.-Korea FTAThe number of imported U.S.-made cars to Korea more than tripled over the past four years, a feat largely attributable to the U.S.-Korea Free Trade Agreement (FTA) that went into effect in 2012.
According to industry sources on Monday, the number of imported cars specifically manufactured in the U.S. in 2015 increased by 3.6 times compared to 2011, before the new FTA was instituted.
During the same period, Korea’s imported car industry as a whole expanded from 105,000 units to 244,000 units. The number of cars imported to Korea from U.S. factories stood at 13,669 in 2011 while increasing last year to 49,096. Trade volume also jumped from $362.9 million to $1.2 billion.
In 2012, a renewed FTA between Korea and the U.S. halved the tariff imposed on U.S.-made cars imported to Korea from 8 percent to 4 percent.
Later this year, the lowered 4 percent tax rate will be abolished, a move expected to further boost local importers of cars made in the United States.
In the meantime, the tariff imposed on domestic cars exported to the United States remained at 2.5 percent over the past four years. It will also be removed this year.
The halved tax rate benefited diverse sectors associated with the U.S. car industry, such as American car brands and other foreign carmakers with factories in the states.
In 2011, the number of imported U.S. car brands represented by Cadillac, Chrysler and Ford was just 8,252, increasing to 17,501 units in 2015, a 112.1 percent rise.
Specifically, Ford, one of the most popular U.S. car brands in Korea showed a 147.6 percent jump in its number of imported cars between 2011 and 2015, increasing from 4,184 units to 10,358 last year.
In 2014, the beneficial tax regulation propelled GM Korea, the local operator of U.S. carmaker General Motors, to launch an import business of its U.S. brand Chevrolet Camaro and Impala models, importing 7,000 units in 2015.
Japanese and German brands such as Toyota, Honda and Volkswagen also increased the import of their cars manufactured in U.S. factories over the past four years.
According to data compiled by the Korea Automobile Manufacturers Association and Korea Automobile Importers and Distributors Association, the import volume of these brands in 2011 reached 5,000 units, but in 2015, the number expanded to 20,000 units.
“Starting this year, the tariff will get completely wiped out, which will make Korea’s imported car industry even more competitive,” an industry insider said. “The number of cars imported to Korea from the U.S. will increase.”
BY JIN EUN-SOO [firstname.lastname@example.org]
More in Industry
Work at home is not as easy as it sounds, ministry says
[NEWS IN FOCUS] Spotify is still almost here, and seems to be getting closer
Korea Inc. calls on Suga to relax border restrictions
House-bound consumers awaken a sleeping industry