From the Economic Policy Institute:
How a FTA W/ Columbia and S. Korea would negatively impact U.S. jobs and the trade deficit:
http://epi.3cdn.net/127ee2845f280b9005_sdm6bnp0x.pdf"The motor vehicles and parts sector is responsible for a large share of the overall U.S. trade deficit with
Korea, and it is one of our most imbalanced trade relationships. Between 2006 and 2008, it was responsible
for 71% to 79% of the U.S. trade deficit with Korea. Imports exceeded exports in this sector by factors
ranging between nearly 13:1 and 17:1. The U.S. trade deficit with Korea in motor vehicles and parts ranged
from $9.5 billion to $10.8 billion in this period. This reflects the fact that the automotive sector is a
pillar industry in the Korean economic development model, and the market is largely closed to U.S. imports
through a combination of differences in tastes (Korean consumers prefer much smaller and more fuel
efficient vehicles than those sold in the U.S.) and an extensive network of product regulations that serve as
effective non-tariff barriers to imports.
U.S. imports of small trucks benefit from a 25% tariff that applies to imports from most countries (except
for Mexico and Canada, under NAFTA). Th is tariff will be phased out over 10 years under the KORUS FTA.
Th e truck sector has been the most large-scale, profitable segment of the U.S. automotive market served by
U.S. auto companies. Despite the truck tariff, U.S. companies face substantial competition from imported
trucks, especially from Japan. If the tariff on Korean truck imports is phased out, there is no doubt that
Korean and other manufacturers will rapidly scale up production in Korea and that small truck exports to the
United States will rise very rapidly as the truck tariffs are phased out.
In 2007, the last full year before the auto crisis, 8.5 million vehicles were sold in the U.S. small truck
market (which includes minivans and sport utility vehicles); 16.3% (about 1.4 million) of those vehicles
were imported from outside the NAFTA region (U.S. vehicle sales statistics include vehicles manufactured in
Canada and Mexico within the “domestic” category); 7.6 million units were sold in the U.S. auto market in
2007; and 31.2% (2.4 million) of those vehicles were imported from outside of North America.2 If the truck
tariff is phased out, there is every reason to believe that the truck import share will rise to one-third or more
of the U.S. auto market.
In addition, elimination of the truck tariff would remove a substantial incentive for
foreign producers to assemble vehicles in the United States. The growth of such “transplant” production has
been perhaps the most rapidly growing segment of vehicle production in the United States in the past decade.
Transplant production would likely fall if the truck tariff were reduced or eliminated, and it would be replaced
with cheaper, imported vehicles, displacing most or all of the U.S. labor content of those units. The result
would be rapid growth in the U.S. vehicle and parts trade deficit, and falling output and employment in these
industries in the United States. Th e U.S. vehicle and parts trade defi cit with Mexico, which was liberalized
under the NAFTA agreement in 1993, reached $28 billion in 2008, eliminating more than 200,000 jobs or
job opportunities in these industries....."
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