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Unreasonable Uncle Sam

If American carmakers want to do business in another country, they should accommodate rather than blame regulations.
Oct 14,2017
이미지뷰
U.S. Trade Representative Robert Lighthizer speaks in the Eisenhower Executive Office Building of the White House complex in Washington during his swearing-in ceremony on May 15. [AP/YONHAP]
The latest controversy over the Korea-U.S. free trade agreement has some arguments that don’t make sense. The most notable was the claim that the FTA was unfair and that American cars were not selling well in Korea. Right after the Korea-U.S. summit in April, President Donald Trump said President Moon Jae-in would have American carmakers compete more fairly in Korea. In other words, he seems to think American automakers are not treated fairly right now.

But drive through the posh Gangnam District in southern Seoul, and one will find an avalanche of imported cars. Despite Volkswagen’s diesel scandal, imported cars in Korea have made up 15.2 percent of registered cars this year up to August. It is close to the record of 15.5 percent in 2015. If Volkswagen sales recover, it is a matter of time when imported cars make up 20 percent.

So it is complete nonsense to claim that imported cars are treated unfairly. There is no way that only American cars suffer when the United States is a blood brother. Nevertheless, the Trump administration insists that the Korean government is tactfully hindering U.S. car sales, but the unfair clauses that the U.S. trade representative points out are absurd.

There are five demands that the trade representative is making on automobiles, and they can be granted immediately but result in little effect. They are asking to allow red blinkers in addition to yellow ones like in the United States and remove the requirement that American carmakers train Korean repair companies. But if American carmakers want to do business in another country, they should accommodate rather than blame regulations.

The problem is that not only Trump but also U.S. Trade Representative Robert Lighthizer, who is overseeing the Korea-U.S. FTA renegotiation, is displaying this unilateral attitude. He has ample experience dealing with Korea and is known for his forceful rhetoric when negotiating.

As deputy U.S. trade representative, he traveled between Seoul and Washington and concluded the voluntary export restraints on steel. In the final stage of negotiations in Washington, the last point was the percentage of Korean steel compared to total volume in the United States. Korea wanted more than 2 percent while the United States adhered to 1.6 percent. After the meeting, former Commerce Minister Kim Cheol-su returned to his hotel room and received a phone call from Lighthizer. He said he was leaving for California that night, and if Korea didn’t accept the demand, the deal was over.

The Korean delegation did not know whether to believe what he said. In order to verify that he was actually leaving Washington, the team checked the list of passengers to California that night, and his name was nowhere to be found. So the negotiators persistently demanded 2 percent, and the deal was made the next day.

Those who know that Lighthizer can bluff and threaten think he could bring up voluntary export restraints again. However, it will only reduce Korea’s automobile exports , which goes against the Uruguay Round principles that ban such restraints. Some say Korea needs to risk breaking its free trade deal with the United States. However, it is undesirable to scrap a pact that benefits Korea in so many ways. There are voices saying it may be wiser to solve the issue in areas other than commerce. For example, with the North Korean threat rising, South Korea could buy more weapons to please the United States.

Another tactic is appealing to those who support South Korea’s alliance with the United States and exporters who would suffer if the FTA is scrapped. The theory of power works in the international community, and sometimes, we need to accommodate absurd demands knowing they are unreasonable.

JoongAng Ilbo, Oct. 11, Page 30

*The author is an editorial writer for the JoongAng Ilbo.

Nam Jeong-ho