Trade Ministry says tariffs on pickup trucks are no big dealA revised trade agreement calling for a 20-year extension of tariffs on Korean pickup trucks that can be sold in the United States will have a limited impact on the local auto industry, Seoul’s Trade Ministry said on Tuesday.
Last week, Seoul and Washington signed their amended free trade agreement (FTA), which includes delays in the elimination of 25 percent duties on Korean-made trucks until 2041. The duties were set to be phased out from 2019 to 2021.
In a report submitted to parliament, the Ministry of Trade, Industry and Energy said the extension of tariffs would barely affect Korean manufacturers, which presently don’t export pickup trucks to the U.S. market.
If local companies produce half of all pickup trucks in American factories and ship half of them from Korea, only 2,960 vehicles can be exported annually from 2021 to 2040 due to high import duties.
The stiff duties won’t affect vehicles made in American factories, it noted.
Seoul’s doubling of the 25,000-vehicle unit threshold for U.S. car shipments that do not have to comply with domestic industry regulations would bring about little change to the local market, it noted, based on analysis of past sales records by U.S. carmakers.
Two government think tanks - the Korea Institute for Industrial Economics & Trade and the Korea Institute for International Economic Policy - analyzed the impact of the bilateral trade pact.
The ministry said the new agreement on the investor-state dispute settlement (ISDS) clause and anti-dumping and countervailing duty proceedings would help improve transparency in dispute settlement processes.
While investors could sue countries through international arbitration bodies for alleged discriminatory practices under the present ISDS provision, the two sides added clauses to prevent potential abuse of the arbitration system by multinational companies and better safeguard the right to regulate in the interest of the public.