(Washington D.C.)- U.S. Rep. Sander Levin (D-MI), a senior member of the House Ways and Means Trade Subcommittee, today offered the following statement on the beginning of the fifth round of negotiations of the U.S. - South Korea FTA in Montana:

"The Bush Administration has a responsibility to negotiate a two-way trading street with South Korea. While South Korea continues to enjoy wide-open access to our automobile market, the United States faces tall barriers to South Korea's automobile market. This agreement will face strong opposition in Congress if these barriers are not torn down."

Last week, Levin, along with Michigan Senators Carl Levin and Debbie Stabenow, and U.S. Rep. John Dingell (D-MI), sent this follow-up letter to USTR Susan C. Schwab expressing the need for negotiators to make immediate progress on auto issues.

A copy of the letter is below:

December 1, 2006

The Honorable Susan C. Schwab       
United States Trade Representative
Office of the U.S. Trade Representative
600 17th Street, N.W.
Washington, D.C. 20508                           

Dear Madam Ambassador:

        We are writing, in advance of next week's U.S.-Korea Free Trade Agreement negotiations, to express our growing concern with the lack of progress on automotive sector issues in these negotiations.  We want to make clear that if the satisfactory resolution to Korea's closed auto and auto parts markets is not achieved, we will strongly and actively oppose the agreement.

        For the U.S. automotive industry and the hundreds of thousands of workers it supports, the negotiations with Korea continue to be among the most important that the United States has ever undertaken.  It would be one of only a few free trade agreements the United States has negotiated with a major automotive producing and exporting nation and one with a significant potential market for U.S. exports of cars and automotive products. 

        Korea has developed a world-class automotive industry that is currently the world's fifth largest producer and the third largest exporter, and has become a global automotive powerhouse, exporting seven out of every ten vehicles it builds.  Yet, Korea actively protects its automotive sector with tariff and non-tariff barriers, and has done so for decades.  With just a 3 percent import share in 2005, Korea maintains the most closed auto market in the industrialized world.  In 2005, the United States shipped only $562 million worth of auto parts to Korea, slightly less than we shipped in 1999.  This compares to Korea's auto parts exports to the United States of $2.7 billion in 2005, up from $919 million in 1999 - nearly a 200 percent increase. 

        Given the deeply frustrating auto trade history with Korea, we believe that the United States has to undertake a new approach with Korea to address in a complete, comprehensive, and systemic way the long-standing policies by which Korea created and maintains a fundamentally closed market.  In past agreements, the United States has implemented automotive working or consultative mechanisms to address these long-standing policies and systemic practices.  We believe that it would be a mistake to adopt the same strategy by relying on such mechanisms, which have proven futile given the failure of past agreements to achieve any meaningful access for U.S. products.

        Given the systemic nature of Korea's closed automotive market, Korea must first demonstrate that its market is open by reaching and sustaining specific and measurable improvements in import sales before the United States agrees to provide preferential access for Korea's vehicles and auto parts by lowering U.S. auto and auto parts tariffs.  A key benchmark would be significant improvement in import market share that is in the range of the OECD average.  To make this happen, Korea will need to undertake, among other steps, a comprehensive dismantling of its longstanding automotive non-tariff barriers, which historically have been moving and evolving targets making them difficult to address on an individual, piecemeal basis.  We believe strongly that this type of approach is imperative given Korea's history of one-way automotive trade.   

        The U.S. auto and auto parts industries are facing a very difficult period in which the jobs of tens of thousands of hard-working Americans are at risk, including as a result of closed foreign markets, forced technology transfer policies of major trading companies and numerous other unfair trading practices.  It is imperative that a free trade agreement with Korea provide real opportunities and a level playing field for these important U.S. sectors and the substantial contributions they make to the U.S. economy.  We are confident that U.S. auto and auto parts manufacturers can compete effectively in an open and fair Korean auto market, and we look forward to working with you during this process to achieve a truly open Korean automotive market and more balanced automotive trade with Korea.

        We would suggest as well that, in order to truly appreciate both the economic impact that the automotive sector has on the United States and to provide a better understanding of the role of the U.S. automotive industry, the next round of negotiations held in the United States take place in the state of Michigan.

        Sincerely,

s/

Sen. Carl Levin                             Rep. John D. Dingell

Sen. Debbie Stabenow                  Rep. Sander M. Levin
 

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