Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 29, 1995 TAG: 9509290077
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Journal of Commerce
DATELINE: WASHINGTON LENGTH: Medium
U.S. Trade Representative Mickey Kantor called the agreement ``a significant step forward'' but warned that ``much more needs to be accomplished to fully open the Korean auto market.'' He indicated that the pressure would be on Korea immediately to offer further concessions.
This was a much sterner warning than Kantor delivered to Japan after last June's auto pact with that government.
He said the United States would prepare a complaint against Korea's remaining barriers on auto imports to take to the World Trade Organization, and hinted that June 1 would be the new deadline for Korea to avoid that action.
At the same time, Kantor said the administration had declined to name South Korea or any other country to an annual list of trade problem ``priorities'' under the so-called Super 301 law.
Both the Korea agreement and the decision to avoid new confrontations under Super 301 reflect a shift by the administration away from noisy, rhetorical battles on trade and toward a quieter and more diplomatic approach.
Unlike the epic fight with Japan that led to an auto trade agreement in June, administration officials have refrained from threatening South Korea with sanctions and have not engaged in the kind of verbal brawling that took place with Japan for more than a year.
Super 301 was enacted in 1988 as a way to focus international attention on trade barriers in other countries, and it called for trade retaliation if those barriers were not addressed within a year. President Bush resisted using the law.
President Clinton promised to use Super 301 more aggressively than his predecessor, but his administration has turned against it.
A senior U.S. trade official said at a news conference Thursday that the threat of Super 301 had been instrumental in forcing South Korea to meet U.S. demands in the auto talks, but an auto industry official involved in the negotiations disputed this.
``The White House doesn't want to use Super 301 against Korea or any country, and the Koreans know this,'' he said. ``We're still very hopeful about opening that market, but Super 301, to be honest, is not playing a big factor.''
In many ways the Korea auto agreement does much more to address that nation's barriers to car imports than the recent Japan agreement, which was billed as covering autos and auto parts but did little to directly attack barriers to auto trade.
The Japanese government agreed to send a letter to auto dealers reminding them that they were free to carry imported cars. Beyond some non-binding predictions from the U.S. side about how many new foreign auto dealerships should open in the next few years, the Japanese government made no new commitments last June on autos. Previously, it had already decided to loosen inspection rules for autos.
By contrast, the Korea agreement directly tackles what U.S. automakers consider the major barriers to imports.
While the results are incomplete in some areas, the agreement by itself should provide some opportunity for U.S. companies, ``in dollars and cents,'' said Steve Collins, director of international affairs for the American Auto Manufacturers Association.
For example, South Korea agreed to reduce discriminatory taxes collected on autos with larger engines, a disparity that falls disproportionately on imports, he said.
Kantor said Thursday that Korea had agreed to reduce taxes 24 percent for engines between 2.5 liters and 3 liters and by 41 percent for engines above 3 liters.
That will reduce the price for imported cars by 15 percent, Kantor said, or about $2,800. Using AAMA's analysis, this would still leave a disparity of up to 25 percent, but Collins said that it nevertheless represents a ``significant step'' in correcting the price discrimination.
by CNB