Here's a little more on the issue of Korean car regulation and standards for imported cars:
The Korean government is expected to apply tougher standards on cars manufactured in Europe than those made in the US in terms of fuel efficiency and greenhouse gas emissions.
Trade Minister Kim Jong-hoon told Yonhap News Agency on Thursday that with European car sales exceeding those of the US a stricter standard must be applied.
The trade ministry plans to carry out negotiations with the EU on the issue in the near future but Kim said the talks will be separate from the Korea-EU free trade agreement.
First off, it's interesting that implicit in this statement may be the point that U.S. car sales in Korea are fairly low, and thus the harms from U.S. car imports that do not meet normal standards are not worth worrying about.
Second, I'm not sure the efficiency and emissions standards mentioned here are the same as the "safety" standards mentioned in the context of the U.S. quota. This may be a completely separate issue.
Third, you would think that the Europeans would press hard in any negotiations to get the same benefits the U.S. got from KORUS. On the other hand, there's this. The White House fact sheet on the KORUS FTA says the following:
Automotive Safety Standards: Safety standards have effectively operated as a non-tariff barrier to U.S. auto exports. The 2010 supplemental agreement announced today allows for 25,000 cars per U.S. automaker – or almost four times the number allowed in the 2007 agreement -- to be imported into Korea provided they meet U.S. federal safety standards, which are among the most stringent in the world.
Here's what I wonder. As this article in the China Post explains, the Europeans (and Japanese) export cars from their U.S. factories to Korea. As a result, the KORUS FTA may actually have substantial benefits for European (and Japanese) car-makers:
While beneficial to U.S. carmakers' Korean operations, some in the industry suspect that non-U.S. brands stand to gain more out of the pact than their U.S. rivals.
While the majority of vehicles shipped from the U.S. are those of U.S. carmakers, a significant number of European and Japanese firms' vehicles sold here are manufactured in the United States.
According to industry statistics about 46 percent of the 8,362 U.S.-made automobiles imported to Korea were European and Japanese brands.
Of the non-U.S. brand vehicles imported from the U.S., about 60 percent were Japanese brands, with Nissan's mid-sized sedan Altima making up the bulk of the volume.
With Nissan Korea, one of the fastest growing foreign carmakers in Korea, planning a major expansion drive next year, the number of U.S.-manufactured Nissan imports is likely to increase.
Having sold 3,217 vehicles on the local market by the end of November, Nissan's Korean sales increased by 78.3 percent compared to the same period last year. For the whole of 2010, the company projects an increase of 75 percent.
Next year the company is aiming to sell 5,000 units on the local market.
In addition, the company's plans to introduce the Cube next year are likely to push up the number of U.S.-made Nissan vehicles imported to Korea further.
According to Nissan Korea officials, Cube vehicles sold here will be shipped from the U.S., and while no specific sales target has been set the Cube is likely to prove popular. The Cube, which has proved a hit in other markets with more than 1 million units having been sold in Japan, is the most anticipated Nissan vehicle in Korea, the company said.
In addition, with Japanese carmakers having a larger presence here, some in the industry expect that European and Japanese brands' vehicles could take up as much as 70 percent of automobiles imported from the U.S. once the pact is implemented.
But beyond these general benefits, here's my question. Are European (and Japanese) car factories in the U.S. considered "U.S. automakers" and thus able to benefit from the 25,000 car quota? Or is that just for the Big 3? Some readers might know the answer to this (I didn't see anything in a quick web search). Feel free to let me know in the comments.
