WASHINGTON, D.C. – On the two year anniversary of the enactment of a free trade agreement between the United States and South Korea, U.S. Sen. Sherrod Brown (D-OH) urged the United States Trade Representative (USTR) to crack down on unfair trade practices which hurt the American auto industry. Two years after the signing of KORUS FTA, Brown argued that South Korea’s auto policies discriminate against American autos, closing them to the Korean market.

“One of the lessons of the last two decades is that free trade agreements have too often come at a cost to American interests,” Brown said. “One in every eight Ohio jobs is connected to the auto industry. That means that unfair trade practices that hurt American autos disproportionately affect Ohio workers. As South Korea considers entry into TPP negotiations, the Administration must ensure South Korea doesn’t discriminate against the American auto industry. Taking action would protect local jobs and ensure the strength of Ohio’s economy.” 

Brown’s letter to USTR Michael Froman follows recent interest by South Korea to join Trans-Pacific Partnership (TPP) negotiations. Brown cited the United States’ auto trade imbalance as evidence of unfair discrimination again U.S. autos. Last year, Korea exported 752,675 automobiles to the U.S., while the U.S. exported only 27,553 autos to Korea. This imbalance accounted for more than 90 percent of our overall trade deficit with Korea last year. 

Specifically, Brown contended that:

  • South Korea’s CAFE/CO2 standards are more aggressive than the U.S. equivalent and fail to provide adjusted standards for small volume importers;
  • South Korea’s proposed fuel economy audits are too stringent and would make it more difficult for American autos to meet Korean standards and to compete; and
  • South Korea’s proposal that defective cars indefinitely be recalled, instead of the American 10 year standard, disproportionately hurts foreign autos. 

Brown has long been an opponent of NAFTA style agreements and continues to fight for the American auto industry. In March 2013, Brown joined a group of more than 50 senators in urging President Obama to put the best interests of American workers and businesses first as negotiations continued with Japan on its potential entry to the TPP. Brown and his colleagues specifically cited Japan’s longstanding efforts to impose trade barriers and block U.S. exports as actions that have hurt the American economy, domestic job creation, and specifically its auto industry.

In early 2009, Brown was a strong advocate for the American auto rescue which helped protect Ohio’s auto industry. In November 2008, he introduced S. 3175, the Auto Industry Emergency Bridge Loan Act, with a bipartisan group of colleagues. In December 2008, Brown fought to ensure that funds from the Troubled Asset Relief Program (TARP) were allocated to aid the Big 3 and American auto suppliers—despite near-unanimous opposition from most House and Senate Republicans. One in every eight Ohio jobs is connected to the auto industry; one in every six cars produced in the United States is made in Ohio; and 80 of Ohio’s 88 counties are home to an auto manufacturing facility.

Brown is the author of the book Myths of Free Trade and has been described as “Congress’ leading proponent of American manufacturing.” Brown also stood up to President Clinton while NAFTA was being debated in 1993.

Brown’s letter to USTR Froman can be read in its entirety below:

 

March 12, 2014

 

The Honorable Michael Froman

Ambassador

Office of the United States Trade Representative

600 17th Street, NW

Washington, D.C. 20508

 

Dear Ambassador Froman:

 

As we mark the second anniversary of the Korea-U.S. (KORUS) Free Trade Agreement, I am concerned that the U.S. auto sector, which supported KORUS, still faces significant and discriminatory challenges in Korea.  Despite commitments to remove non-tariff barriers (NTBs), U.S. companies continue to face disproportionate burdens that deny them equal access to Korea’s market.  

Korea's automotive regulatory policy historically has been tailored to its domestic industry and set unreachable standards for foreign imports.  According to U.S. automakers, significant regulatory barriers remain in place.  For example, Korea’s CAFE/CO2 standards, which take effect in 2016, are much more aggressive than the U.S. equivalent and do not include adjusted targets for small volume importers. 

Moreover, Korea is considering modifications to fuel economy label standards that would require fuel economy audits to come within three percent of the standard, down from five percent, despite the need to accommodate variables in testing.   U.S. producers believe these changes would make it easier to discriminate against American autos.  Other regulations demand automakers to recall defective vehicles indefinitely instead of for 10 years, as required in the U.S., and to notify Korea of any other recalls in all other markets within 14 days of the recall announcement.  U.S. producers believe these requirements disproportionately affect imports.  

Korea's NTBs have traditionally kept U.S. auto makers out of their market, and I am concerned that KORUS implementation has done little to help foster a competitive balance.  Last year Korea exported 752,675 automobiles to the U.S., compared to the mere 27,553 automobiles exports to Korea from the U.S. This imbalance accounted for more than 90 percent of our overall trade deficit with Korea in 2013.   

I believe that Korea’s calculated use of NTBs to promote their domestic industry at the expense of U.S. auto makers could be a violation of its trade obligations.  Given Korea’s interest in joining the Trans-Pacific Partnership, it is critical that we investigate and address any unfair trade practices quickly.  I urge USTR to consult with Korea on the U.S. producers’ concerns and ensure full compliance with KORUS.  

 

Sincerely,


Sherrod Brown

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