‘Steel’ to lead exemption from tariff bomb… Concerning automobile industry due to continuous yield
Park Jung Il | comja77@ | 2018-03-27 09:48:52
The Korean government has reached agreement on a 25 % tariff exemption for the US and Korean steelmakers, as well as an additional opening of the domestic auto market in the negotiation of the Korea - US Free Trade Agreement (FTA) amendment. In the case of steel, 74 % of US exports to the US last year were agreed not to be subject to 25 % tariffs under Article 232 of the US Trade Expansion Act, and the FTA sought compromises on the way to ease the conditions for imports of US automobiles.
The domestic industry has welcomed the fact that the negotiations have been concluded in a better condition than the initial concern. Exports of steel products to the US will inevitably be hit to some extent, and automobiles will have an adverse impact in the mid- to long-term, but the overall valuation is dominant.
Kim Hyun-chong, Trade and Industry Minister of Commerce and Industry explained the result of the negotiation of steel tariffs and FTA negotiations with the US at the Seoul government building on March 26, and the Korean steel products exported to the US are equivalent to 74% of last year`s exports to the US (362,000 tons) Said it would not apply 25 % additional tariffs on 2.68 million tonnes.
It is higher than the 63% steel import limit originally demanded by the US steel industry. However, some level of damage is inevitable. By product category, steel plate quotas for steel products such as Yuhang Steel, which is in increasing demand due to the boom of petroleum resources such as shale gas, have been reduced to 53% compared to last year, instead of securing a 111% quota for flat products in 2017. Considering that Korean steel exports to the US were worth US USD 1.6 billion last year, the industry expects to see exports fall by about USD 800 million (KRW 866 billion) annually.
The industry acknowledges the government`s efforts, but evaluates it as somewhat unfortunate. The Korea Iron & Steel Association said, "The outcome of the negotiations is better than the US tried to limit steel imports to 63 percent last year," he said. "The government`s efforts to secure more quotas from the US hard- It`s a pity."
In the case of automobiles, there is virtually no damage at this point. We decided to allow imports of US automobiles that comply with US safety standards to 50,000 vehicles per year (currently 25,000 vehicles), but we still do not have more than 50,000 cars exported to the US each year . Kim stated, "Actual imports from the US are less than 10,000 copies per manufacturer." According to the Ministry of Commerce, Industry and Energy, Ford exported 8107 units, GMs 6762 units, and Chrysler 4843 units to the Korean market as of last year.
The fact that the tariff elimination period for pickup trucks was extended from 2021 to 2041 also has no impact on Korea`s automobile exports right now. Kim explained, "We considered that there are no companies that currently produce pick-up trucks in the country and export them to the United States."
The domestic automobile industry also welcomed the decision to increase the ceiling on eco-innovation credit when setting the next year`s standard in 2021, which is an incentive to develop eco-friendly cars, based on global trends such as US standards. The Korea Automobile Manufacturers Association (KAI) said, "We have been concerned about the tariff rate adjustment and strengthened regulations on the country of origin, but we highly appreciate the efforts made by the government to keep it as it is." In the field of safety and environment, It is necessary to reschedule domestic producers in a flexible way in the mid- to long-term."
However, there are also concerns that it has limited room to respond to future markets. An anonymous auto industry expert said, "The Korea-US FTA is a passion for the auto industry."
In fact, the FTA agreement, which was first reached in 2007, decided to eliminate the 2.5% tariff on Korean passenger cars immediately below 3000cc and within 3 years for more than 3000ccc. This was extended in five years. In addition, South Korea revised its 8% tariff on US automobiles to 4% for 4 years and completely eliminates it for 5 years. It also pointed out that this time it has also extended the pickup truck tariff and prevented the market entry to 15% of US car sales.
It also raises the question of whether bypass imports of European and German cars produced in the United States will increase as the safety verification regulations for US products are relaxed. According to the Ministry of Industry, 8323 BMW vehicles imported last year from the United States, 4624 Benzs, 6197 Nissan vehicles, and 4,596 Toyota vehicles.
An industry expert said, "Now, the automobile industry is suffering from five uses from restructuring, such as shutdown of GM Gunsan plant in production and export reduction, shortage of Chinese sales after Sad (high-altitude missile defense system) Taking into account the characteristics of industries with high impacts to other industries, such concessions in the automotive sector can be poisoned in the long run."
By Park Jung Il comja77@
[ copyright ⓒ The Digitaltimes ]
The domestic industry has welcomed the fact that the negotiations have been concluded in a better condition than the initial concern. Exports of steel products to the US will inevitably be hit to some extent, and automobiles will have an adverse impact in the mid- to long-term, but the overall valuation is dominant.
Kim Hyun-chong, Trade and Industry Minister of Commerce and Industry explained the result of the negotiation of steel tariffs and FTA negotiations with the US at the Seoul government building on March 26, and the Korean steel products exported to the US are equivalent to 74% of last year`s exports to the US (362,000 tons) Said it would not apply 25 % additional tariffs on 2.68 million tonnes.
It is higher than the 63% steel import limit originally demanded by the US steel industry. However, some level of damage is inevitable. By product category, steel plate quotas for steel products such as Yuhang Steel, which is in increasing demand due to the boom of petroleum resources such as shale gas, have been reduced to 53% compared to last year, instead of securing a 111% quota for flat products in 2017. Considering that Korean steel exports to the US were worth US USD 1.6 billion last year, the industry expects to see exports fall by about USD 800 million (KRW 866 billion) annually.
The industry acknowledges the government`s efforts, but evaluates it as somewhat unfortunate. The Korea Iron & Steel Association said, "The outcome of the negotiations is better than the US tried to limit steel imports to 63 percent last year," he said. "The government`s efforts to secure more quotas from the US hard- It`s a pity."
In the case of automobiles, there is virtually no damage at this point. We decided to allow imports of US automobiles that comply with US safety standards to 50,000 vehicles per year (currently 25,000 vehicles), but we still do not have more than 50,000 cars exported to the US each year . Kim stated, "Actual imports from the US are less than 10,000 copies per manufacturer." According to the Ministry of Commerce, Industry and Energy, Ford exported 8107 units, GMs 6762 units, and Chrysler 4843 units to the Korean market as of last year.
The fact that the tariff elimination period for pickup trucks was extended from 2021 to 2041 also has no impact on Korea`s automobile exports right now. Kim explained, "We considered that there are no companies that currently produce pick-up trucks in the country and export them to the United States."
The domestic automobile industry also welcomed the decision to increase the ceiling on eco-innovation credit when setting the next year`s standard in 2021, which is an incentive to develop eco-friendly cars, based on global trends such as US standards. The Korea Automobile Manufacturers Association (KAI) said, "We have been concerned about the tariff rate adjustment and strengthened regulations on the country of origin, but we highly appreciate the efforts made by the government to keep it as it is." In the field of safety and environment, It is necessary to reschedule domestic producers in a flexible way in the mid- to long-term."
However, there are also concerns that it has limited room to respond to future markets. An anonymous auto industry expert said, "The Korea-US FTA is a passion for the auto industry."
In fact, the FTA agreement, which was first reached in 2007, decided to eliminate the 2.5% tariff on Korean passenger cars immediately below 3000cc and within 3 years for more than 3000ccc. This was extended in five years. In addition, South Korea revised its 8% tariff on US automobiles to 4% for 4 years and completely eliminates it for 5 years. It also pointed out that this time it has also extended the pickup truck tariff and prevented the market entry to 15% of US car sales.
It also raises the question of whether bypass imports of European and German cars produced in the United States will increase as the safety verification regulations for US products are relaxed. According to the Ministry of Industry, 8323 BMW vehicles imported last year from the United States, 4624 Benzs, 6197 Nissan vehicles, and 4,596 Toyota vehicles.
An industry expert said, "Now, the automobile industry is suffering from five uses from restructuring, such as shutdown of GM Gunsan plant in production and export reduction, shortage of Chinese sales after Sad (high-altitude missile defense system) Taking into account the characteristics of industries with high impacts to other industries, such concessions in the automotive sector can be poisoned in the long run."
By Park Jung Il comja77@