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More on 2010 KORUS trade deal

12/15/10

New agreement gives better protection to our members

The UAW, many members of Congress and the Obama administration all publicly criticized the U.S. Korea Free Trade Agreement (KORUS FTA) negotiated by President George W. Bush in 2007.

Shortly after taking office, President Obama began the process of renegotiating the flawed trade deal to explicitly address the automotive provisions that threatened the health of the domestic industry and jeopardized thousands of American jobs.

UAW members show support for striking South Korean Hyundai workers at the Hyundai-Kia Motors American Technical Center in Ann Arbor, Mich. Photo by Chris Skelly.

For the first time ever, the UAW was consulted and played a meaningful role in the negotiations and was able to successfully influence the process and secure significant improvements to the automotive provisions in the trade agreement.

Here are some facts about the renegotiated agreement:

Why does the UAW support the 2010 KORUS FTA now when it didn’t support the 2007 agreement?
The UAW believes the renegotiated 2010 agreement gives far better protection to our UAW members than the 2007 agreement because it will protect current American auto jobs and grow more American auto jobs. The KORUS FTA also includes labor and environmental commitments, as well as important enforcement mechanisms. We also believe that if we did not get actively engaged before the Republican majority took control of the U.S. House of Representatives in January, then the Republicans would have advocated for the 2007 Bush-negotiated agreement with NO safeguards for our members.

How does the 2010 agreement give UAW members more protection than the 2007 agreement?

  • AUTO TARIFFS: The 2010 agreement delays implementation of the tariff reductions on autos. The 2007 agreement would have immediately eliminated U.S. tariffs on automobiles and most auto parts. The 2010 agreement keeps the 2.5 percent U.S. tariff in place until the fifth year after the FTA goes into effect.
  • LIGHT TRUCK TARIFFS: The 2007 agreement would have required the United States to start reducing our 25 percent tariff on Korean pickups immediately and eliminated it by year 10 of the agreement. The 2010 agreement allows the United States to maintain the full 25 percent tariff until the eighth year and then phases it out by the tenth year.


Does the 2010 agreement open the Korean markets to our U.S.-made vehicles better than the 2007 agreement?

  • LIGHT TRUCK TARIFFS: Korea is required to keep to its original commitment to eliminate its 10 percent tariff on U.S.-made trucks immediately. 
  • ELECTRIC CAR TARIFFS: The 2007 agreement would have eliminated tariffs on electric cars and plug-in hybrids by year 10. Under the 2010 agreement, Korea will immediately reduce its electric car tariffs from 8 percent to 4 percent, and will phase out their tariff by year five of the agreement.
  • SAFETY STANDARDS: New in the 2010 agreement is a provision that allows for 25,000 U.S.-made vehicles per U.S. automaker to be imported into Korea provided they meet U.S. federal safety standards.  In the past, Korean safety standards have been used as a way to prevent the export of U.S. vehicles to Korea. After reaching 25,000 U.S. vehicles, additional U.S. vehicles are allowed to be imported into Korea if they meet, or are modified to meet, the Korean safety standards. 
  • AUTOMOTIVE ENVIRONMENTAL STANDARDS: Also new under the 2010 agreement, all U.S. autos will be considered compliant with Korean environmental standards on fuel economy and emissions.  This has also been a barrier to the export of American vehicles to Korea.

Is there a limit to the number of Korean cars that can be imported to the U.S.?

  • SAFEGUARDS: The KORUS FTA has a first ever, auto specific safeguard provision to protect against “surges” of Korean vehicles that harm the domestic auto industry. The safeguard goes into effect when the tariff reductions begin. The UAW, the domestic auto companies or the U.S. government may initiate a case under the new provision by petitioning the International Trade Commission (ITC). The process is similar to the one the Steelworkers successfully used in the case involving Chinese tires. The remedy for a finding of injury is the “snapback” to the original tariff levels prior to implementation of the FTA. The new procedures developed for the KORUS FTA allow the remedy to be used more than once, and makes it available for 10 years after the tariffs are eliminated.

How else was the KORUS FTA improved?
Korea has agreed to additional transparency in the area of all nontariff barriers, including creating a 12-month period between the time a new regulation is issued and when U.S. auto companies must comply with it.

Does the KORUS FTA address labor rights?
The agreement includes labor standards for the protection of worker rights, including obligations for Korea to respect core International Labor Organization fundamental labor rights; not to weaken the laws that reflect those rights in any way; and to effectively enforce labor laws designed to ensure a level playing field for American workers to compete. These labor standards are enforceable in the same manner as the commercial provisions of the FTA. Past trade agreements have addressed labor rights in side agreements that are difficult to enforce.


Source: UAW Legislative, Governmental and International Affairs Department