American Automakers Urge President to Cite South Korean Trade Practices
10 September 1997
American Automakers Urge President to Cite South Korean Trade Practices
WASHINGTON, Sept. 10 -- The CEOs of America's Car Companies,
Chrysler Corporation , Ford Motor Company , and General
Motors Corporation , and their trade association, the American
Automobile Manufacturers Association, sent the following letter to President
Clinton on Tuesday, September 9. It was signed by Robert J. Eaton, Chairman &
CEO, Chrysler Corporation; Alex Trotman, Chairman & CEO, Ford Motor Company;
John F. Smith, Jr., Chairman, President, & CEO, General Motors Corporation;
and Andrew H. Card, Jr., President & CEO American Automobile Manufacturers
Association.
The American Automobile Manufacturers Association (AAMA) and its member
companies -- Chrysler Corporation, Ford Motor Company, and General Motors
Corporation -- wish to express our growing frustration with the Republic of
Korea's failure to honor its market-opening commitments under Korea's 1995
automotive trade agreement with the United States. Closed domestic markets
are troubling under any circumstances. But the situation is particularly
unacceptable when it is combined, as is the case in Korea, with
government-directed policies to promote an extraordinary expansion of excess
automobile capacity for export to open markets in the U.S. and around the
world. We urge the Administration to respond to Korea's trade-distorting
practices with serious and meaningful action.
In 1995, after almost two years of negotiations, the Administration
achieved the U.S.-Korea Automotive Memorandum of Understanding to Increase
Market Access for Foreign Passenger Vehicles in the Republic of Korea (MOU).
We welcomed the agreement as a modest effort by the Korean government to begin
reversing its long-standing policy of excluding imports from its automobile
market. On the basis of that 1995 agreement, AAMA's member companies
substantially expanded their investments in Korea with a view to increasing
U.S. exports to that country.
However, despite a promising beginning under this new trade agreement,
Korea has not lived up to its market-opening commitments. Import sales remain
far below expectations. In all of 1996, Chrysler, Ford and General Motors
imported less than 3900 vehicles into a total Korean market of 1.6 million
vehicles. During 1997, the Korean government has not taken any positive
action to promote imports. Instead, there has been a host of continuing
violations of the 1995 MOU.
AAMA believes that the Korean government's maintenance of a sanctuary
automobile market is directly fueling the Korean auto industry's aggressive
international expansion. In the face of mounting global overcapacity in
automotive production and despite the precarious financial position of the
Korean manufacturers, Korean producers have continued to add capacity --
reaching over 3.6 million units in 1996 -- and have announced plans to
increase production to over 6 million units annually by 2000. Allowing Korea
to maintain a closed market while building huge auto assembly capacity
potentially will result in the permanent loss of billions of dollars in U.S.
automotive exports.
This irrational buildup of excess capacity has led to Korean companies
engaging in business arrangements which violate international trade rules.
The United States government has now joined the European Community and Japan
at the World Trade Organization in objecting to a discriminatory national car
program in Indonesia that benefits a single Korean auto company.
Chrysler, Ford and General Motors are not alone in expressing growing
exasperation with Korea's behavior as a trading partner. Korea's unfair auto
trade practices have also been widely criticized by other nations at recent
meetings of the Organization for Economic Cooperation and Development and in a
joint visit to Seoul in July with representatives of the European Automobile
Manufacturers Association. All efforts to have the Korean government honor
its commitments to fair, open trade practices -- not only with the U.S. but
with other trading partners as well -- have been met with complete
intransigence.
We believe that the Korean government's actions unquestionably deserve to
be identified as priority practices that unfairly limit U.S. market access
under Super 301. Failure by the Administration to insist that Korea adopt
responsible and fair automotive trade policies will make it more difficult to
expand access for U.S. automobiles in that market and will encourage Korea to
continue a pattern of irresponsible trade practices.
We look forward to working with the Administration to increase market
opportunities for auto exports to Korea and to other markets around the world.
AAMA is the trade association whose members are Chrysler Corporation, Ford
Motor Company and General Motors Corporation. Visit the AAMA's site on the
World Wide Web at http://www.aama.com.
SOURCE American Automobile Manufacturers Association